MUMBAI: Stocks and bond markets could expect a straight-talking new RBI governor who is focussed on growth and faster technology adoption by banks. However, brokerages are divided if Sanjay Malhotra, the incoming RBI chief, would go for a faster easing of interest rates.
According to a report by Goldman Sachs, Malhotra’s expertise in taxation has played a key role in shaping direct and indirect tax policies. Analysts at the global financial major feel that Malhotra is expected to use those skills to influence RBI’s monetary stance when there is heightened global uncertainty.
According to Bank of America (BofA), the RBI chief faces the immediate challenge of dealing with a sharper-than-expected slowdown in growth, coupled with the near-term volatility in inflation while also ensuring a stable currency. However, analysts at BofA are not clear what his policy bias could be. They also feel that with a new governor, the risks of a rate cut, even if inflation comes off sharply, have declined materially.
The Japan-headquartered financial major Nomura, however, has an opposite stance about RBI’s move on rates under the new chief. It feels with Malhotra, a finance ministry insider at the helm, the path has been cleared for more and urgent easing. Nomura analysts feel that Malhotra’s experience has given him an acute appreciation of govt’s revenue generation and the importance of growth. They also flagged that there is likelihood of a shift towards more accommodative monetary policy.
According to domestic brokerage house Emkay Global, Malhotra is straightforward in policy communication. During his stint at the department of financial services, he had pushed banks to adopt and focus on technology too. It also pointed out that with the important post of revenue secretary at the finance ministry now vacant, with less than two months for the next Budget, govt will need to fill that position imminently, to ensure minimal disruption to the planning and execution of the Budget.