Maintaining that the Indian capital markets have a robust risk management and surveillance mechanism in place, senior officials said they have beefed up the systems to check any adverse eventuality. The regulators are especially worried after having seen the markets going into a tizzy recently just on unconfirmed reports that Rajan was not keen on a second term. Banks and forex dealers are also gearing up to meet any excessive money demand, especially for dollar, on concerns that Rajan’s eventual exit this September could trigger capital outflows amid jitters among foreign investors. “Only respite is that Rajan chose a Saturday to make the announcement as any such development on a weekday during trading hours could have been much more serious despite a robust risk management and surveillance mechanism in place,” a senior official said. According to officials, the financial market regulators, including RBI itself, were already bracing up for volatile trends ahead of the Brexit referendum this week, but Rajan’s sudden announcement over the weekend has added to the worry.

Source: Mint June 19, 2016 13:07 UTC