kanta DasIn a move that ended weeks of speculation, the government has appointed Sanjay Malhotra, the current Secretary in the Ministry of Finance, as the 26th Governor of the Reserve Bank of India (RBI). Malhotra will take charge on December 11, 2024, for a three-year term. He succeeds Shaktikanta Das, whose tenure ends on December 10, 2024, after a six-year term during which he successfully navigated the Indian financial system through numerous challenges.
A government notification confirmed the appointment, stating: “The Appointments Committee of the Cabinet has approved the appointment of Sanjay Malhotra, Secretary, Department of Revenue, as Governor, Reserve Bank of India, for a period of three years from 11.12.2024.”
Malhotra assumes leadership at a time when India’s economic growth has slowed to 5.4%—its lowest in seven quarters. There is growing pressure for the RBI to cut interest rates to stimulate growth. In its recent monetary policy meeting, the RBI lowered its GDP growth projection for 2024-25 from 7.2% to 6.6%, with growth estimates for the third and fourth quarters at 6.8% and 7.2%, respectively.
Inflation remains a significant challenge for the central bank. Despite easing food prices, headline inflation in September and October was high, mainly due to food costs. The RBI’s inflation projection for 2024-25 is 4.8%, up 30 basis points from the previous estimate. Moreover, external factors such as geopolitical risks, trade policy uncertainty, and the domestic currency’s pressure will require Malhotra’s attention.
Malhotra will also face challenges with the Indian rupee, which is at historic lows, partly due to disappointing domestic economic data and foreign portfolio investment outflows. His leadership will be crucial in navigating these pressures.
A seasoned bureaucrat, Malhotra is a 1990-batch IAS officer from the Rajasthan cadre. He holds a degree in Computer Science Engineering from IIT Kanpur and a Master’s in Public Policy from Princeton University. Prior to becoming Revenue Secretary, he served as Secretary in the Department of Financial Services, Ministry of Finance. Over his career, he has worked in various sectors including power, finance, taxation, information technology, and mines.
Malhotra takes over from Shaktikanta Das, who has been one of the longest-serving RBI Governors, having served since December 2018. Das’s tenure, which was extended by three years in December 2021, is the second-longest in RBI history, after Benegal Rama Rau. There had been speculation for weeks about whether Das would be given a third term, which would have made him the longest-serving RBI governor.
Malhotra’s first major task will be chairing the Monetary Policy Committee (MPC) in February 2025, following the Union Budget. Market experts anticipate that the RBI may begin lowering interest rates in this review, as the worst of the economic slowdown and high inflation is expected to pass.
In its latest policy meeting, the RBI maintained the policy repo rate at 6.5%, keeping a “neutral” stance, marking the 11th consecutive time this rate has been unchanged. However, the RBI reduced the cash reserve ratio (CRR) by 50 basis points to 4% to boost liquidity in the banking system.
Malhotra’s tenure will also involve addressing key regulatory frameworks, such as project finance, liquidity coverage ratio, and bank investments in subsidiaries. His background in computer science is expected to help tackle growing concerns over cybersecurity threats to India’s financial system.
As Malhotra steps into this crucial role, the Indian economy and financial sector will be closely watching how he handles the challenges ahead.
