'Urjit Patel marks continuity for RBI'

Mumbai: The appointment of Urjit Patel as the next Reserve Bank of India`s governor signals policy continuity, although there is no immediate impact on sovereign ratings, credit rating agencies said on Sunday.

The comments come after RBI Deputy Governor Urjit Patel on Saturday won a promotion to run the central bank with a mandate to cement the bank`s commitment on keeping inflation low.

Fitch director Thomas Rookmaaker, director of its Asia-Pacific sovereign ratings group, said Patel would need to continue the fight against high inflation and shoring up weak balance sheets at lenders.

"Urjit Patel`s appointment as the next RBI governor signals a strong likelihood of policy continuity," Rookmaaker wrote. 

"Having served as deputy governor in the past three years, Urjit Patel is well-positioned to further institutionalize these policy changes in the period ahead."

Rookmaaker added Fitch did not drive ratings based on personalities but policies.

"A central bank governor doesn`t need to have a rock star status to be successful in reining in inflation or cleaning up the banking sector," he added.

Moody`s Investors Service said it would monitor for transmission of monetary policy and the clean-up of bad debt in the banking sector. 

"The shift to inflation targeting at the beginning of last year has contributed to enhance the credibility and transparency of India’s monetary policy.

Future inflation developments will provide further indications of monetary policy credibility," said Marie Diron, a Senior Vice President at Moody`s.

"The clean-up of banks’ balance sheet has started and it would be credit positive from a sovereign perspective, if it led to improved bank capitalization levels, renewed loan growth and robust risk processes."

Fitch rates India at "BBB-minus" with a "stable" outlook, while Moody`s rates it at an equivalent "Baa3" but with a "positive" outlook.