'Rajan the communicator had last laugh with market'

Mumbai, Sep 2: As an excellent listener and communicator, the outgoing RBI Governor Raghuram Rajan used all the modes of communication to stop the market from running ahead and got it open-mouthed instead, says a report.

Rajan will demit office on September 6, and will return to teaching.

His three-year tenure has seen many ups and downs in terms of macro-challenges, policy choices and managing fiscal and monetary flanks of the stabilisation policy.

"Rajan is an excellent listener and his policy decisions reflect his careful listening of the bankers' opinions. Being a wonderful listener universally makes him an excellent communicator," SBI Chief Economist Soumyakanti Ghosh said in the ecowrap report today.

"Rajan during his tenure has literally championed both conventional and unconventional modes of communication and not allowed the market to run ahead, instead open mouthed the market," he said.

Such communication had the desired impact on movements in the exchange rate and in the term structure of interest rates being entirely consistent with the RBI's monetary policy stance, the report said.

"Thanks to Rajan we are an inflation-targeting country now. The primary defining characteristics of inflation targeting, symmetry, forward-looking nature and flexibility, require disciplined communication efforts for monetary policy to be credible and effective.

"Rajan has ensured through his judicious communication that inflation targeting is now well-entrenched in the psyche of each and every stakeholder in the financial sector space," the report says.

Under Rajan's leadership, RBI has delivered on all aspects of banking to develop a sound and efficient financial system, which will contribute to the growth process of the country, it said.

Some of his major achievements are: New policy framework, formation of monetary policy framework, implementation of asset quality review to clean balance sheets of PSBs, new banking licence in private sector and licensing small and payment banks, universal payment interface for integrated mobile banking system and last but not the least the transparency in public disclosures of RBI.

PTI