Massive Dollar Debt

One of the most important tests for Mr. Patel will come next month, when Indians abroad will be able to redeem more than $20 billion in foreign-currency bonds issued by banks as an emergency measure to attract money to India. When the rupee had a freefall in the summer of 2013, plummeting to a record low of 67.85, India mobilized USD 26 billion through foreign currency non-resident bank account deposits by offering a special swap window for banks. The three-year deposits are maturing next month.

Ever-Rising Non-Performing Assets and Fixing PSU Banks

Patel will also have to deal with the problem of ever-increasing non-performing assets (NPAs) of banking sector and maintain continuity in the cleaning process his predecessor Raghuram Rajan initiated. Besides, he may find a whole new breed of players coming up in the banking sector, including with full-fledged banking licenses as well as in niche segments. Governor Rajan’s policy of encouraging competition in the banking sector has created the ground for a more competitive banking system to emerge. It would well be in favor of Governor Patel to ensure that such competition is encouraged, allowing more modern banks to expand rapidly. This will put extra pressure on the government to give more flexibility and space to the PSU banks.

Making the Right Choice: Growth vs Inflation

Considered to be the one who is going to target inflation, some quarters fear that Patel will continue with the RBI's focus on managing inflation, which has come under some serious criticism from several quarters because of high rates.

Read Also:

India's Share In Global Smartphone Market May Double In 3 Years

Ind-Ra Upticks GDP Forecast to 7.8 Pct