India appoints Revenue Secretary Sanjay Malhotra as new central bank governor

A Reserve Bank of India logo at the Global Fintech Fest in Mumbai, India, on Sept. 5, 2023.

Niharika Kulkarni | Nurphoto | Getty Images

India has appointed Revenue Secretary Sanjay Malhotra as governor of the country’s central bank for a three-year period, according to CNBC TV18.

He will on Tuesday take over from outgoing Governor Shaktikanta Das, who also served as secretary in the Ministry of Finance before his six-year stint with the Reserve Bank of India (RBI).

Das, who shepherded India’s demonetization initiative in 2016 prior to his time at the central bank, was seen as key to normalizing the RBI’s relationship with the government and steering India through the economic turbulence of the Covid-19 pandemic. His leadership was, nevertheless, also scrutinized during a high-inflation environment for holding back on moving rates.

Malhotra is set to take over at a critical time for the world’s third-largest economy, which is attempting to contain rising inflation without impairing growth.

Last week, the central bank opted to keep interest rates unchanged at 6.5% after inflation surged to a 14-month high of 6.21% in October — above the central bank’s 4% target and 6% tolerance ceiling.

Market concerns have mounted over whether the RBI’s restrictive measures risk deviating India’s economy from hitting its 6.6% growth forecast for the fiscal year through March 2025 after logging a weaker-than-expected expansion of just 5.4% over the July-September quarter.

The International Monetary Fund currently sees economic growth for the country of 1.44 billion at 7% this year, with inflation at 4.4% over the period.

Among other challenges, Malhotra also steps in amid a governmental push for the RBI to relax its prompt corrective action (PCA) guidelines — a framework governing 11 state-controlled banks that allows financial regulators to take action against lenders in poor financial health.

— CNBC’s Ganesh Rao contributed to this report.