Reserve Bank of India Governor Urjit Patel on Monday resigned from his post. “On account of personal reasons, I have decided to step down from my current position effective immediately,” Patel said in a statement uploaded on the RBI’s website.
“It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years. The support and hard work of RBI staff, officers and management has been the proximate driver of the Bank’s considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future,” Patel said.
Patel has become the first RBI governor since 1990 to step down from the post before his term ends, BloombergQuint reported. Patel’s tenure was slated to end in September 2019. His resignation comes days before the RBI’s crucial meeting on December 14.
Meanwhile, a spokesperson of the central bank refuted rumours that Deputy Governor Viral Acharya has also quit and said that Acahrya “does not intend to resign”, according to CNBC-TV 18.
Speculation over Patel’s resignation began last month after a rift between the Centre and the central bank became public. Addressing a press conference after the release of the monetary policy last week, Patel refused to answer questions about the central bank’s spat with the government. “I would avoid those questions because we are here discussing the monetary policy resolution,” he said, according to PTI.
In October, RBI Deputy Governor Viral Acharya said that governments that do not respect a central bank’s independence sooner or later incur the wrath of financial markets. Government officials had recently called for the RBI to relax lending restrictions on some banks. The RBI also opposed a suggestion by the government’s inter-ministerial committee to set up an independent regulator for payment systems.
Three days after the speech, Reuters reported that the Centre is upset with the central bank for publicly talking about the rift. Senior officials said the government fears the rift could tarnish the country’s image among investors.
Finance Minister Arun Jaitley said the central bank had “looked the other way” when banks were lending “indiscriminately” between 2008 and 2014. Government officials said they were surprised that Patel, who was appointed by the Modi administration in 2016 and initially cooperated with the government, is creating tension when the Centre is facing criticism over its handling of the economy before the 2019 General Elections.