Rate Cuts and the Banking Sector Crisis: What Challenges Lie Ahead for New RBI Governor Sanjay Malhotra?

Sanjay Malhotra’s appointment as the RBI Governor comes at a time when GDP growth has declined in the second quarter, and inflation has surpassed the Reserve Bank’s target range. In addition to these, he will face several challenges. On December 11, Shaktikanta Das will step down as the Governor of the Reserve Bank of India (RBI), and Sanjay Malhotra, a 1990 batch IAS officer, will take over the responsibility. As part of Finance Minister Nirmala Sitharaman’s budget team, the new RBI Governor will face several major challenges, including addressing the slowdown in economic growth, managing inflation, deciding on rate cuts, and dealing with the banking sector crisis.

Who is Sanjay Malhotra, the New Governor?

Sanjay Malhotra, the 56-year-old new RBI Governor, is a 1990 batch IAS officer from the Rajasthan cadre. Until now, he has held the position of Secretary of Revenue. He was responsible for increasing tax revenue during the budget process under the Modi government. In November 2020, Malhotra became the Chairman and Managing Director of REC Limited, and before that, he served as Additional Secretary in the Ministry of Power. In 2022, he was appointed as the head of the Department of Financial Services (DFS). Malhotra’s experience in managing the Reserve Bank of India’s Central Board of Directors made him a strong contender for the RBI Governor position.

Educational Background and Career

Sanjay Malhotra completed his engineering degree from IIT Kanpur and his Master’s degree from Princeton University. Over the past 30 years, he has worked across several sectors, including power, finance, taxation, IT, and mining. His extensive experience in finance and taxation, both at the state and central government levels, has been pivotal. During his current tenure, he has played a crucial role in shaping direct and indirect tax policies.

Challenges Ahead for the New Governor

As Sanjay Malhotra steps into the role of RBI Governor, he faces a dual challenge. The Indian economy is experiencing a slowdown in growth, and inflation has risen above the RBI’s target range. Managing these two issues will be his most critical task. Balancing inflation control and economic growth while making decisions on interest rate cuts and handling the banking sector crisis will require careful attention and strategic planning.