News of Raghuram Rajan not accepting second terms hits rupee’s value, Mohandas Pai blames crony capitalists for plotting his ouster


The news of RBI Governor, Raghuram Rajan, having declined the possibility of a second term has severely hit the Forex market.

A major regional newspaper, Anandbazar Patrika, according to agencies, reported that Reserve Bank of India Governor did not want to remain at the central bank, citing unidentified sources.

This led to a fall of rupee to as low as 67.45 per dollar, down 0.3 per cent from its close.

The RBI has not made any comments yet.

Mohandas Pai

Reuters on Wednesday had reported the Narendra Modi government was keen to re-appoint the governor, should he wish to stay on, citing government officials.

Ashtosh Raina, head of foreign exchange trading at HDFC Bank in Mumbai, said, “Some rumours that the governor may not go for a second term led to reducing of short positions. Otherwise the rupee was expected to be strong today on the good GDP numbers.”

Meanwhile, famous tech investor, Mohandas Pai, blamed what he called crony capitalists for plotting against Rajan.

PTI quoted him as saying, “Market sources are saying that vested interests and cronies who have been forced to pay back their loans by banks are instigating all this against Rajan.”

Pai added, “He (Rajan) has asked banks to clean up (their balance-sheets). Now the banks are turning their screws on defaulters.

“Earlier, banks lived on hope that the defaulters will somehow pay. Many defaulters paid one bank, did not pay other banks, went on rolling their accounts. Now, they are all asked to pay back. He has forced them (defaulters to pay back their loans) and the banks balance sheets have become more transparent.”

Senior BJP leader, Subramanian Swamy, has been leading a campaign to oust Rajan. Swamy recently wrote to letters to Prime Minister Modi asking him to sack Rajan as he was ‘mentally not Indian.’