Reserve Bank governor Urjit Patel resigns
10 December 2018
Reserve Bank of India (RBI) governor Urjit Patel has stepped down from his current position with immediate effect, citing personal reasons, according to a brief statement issued by the governor.
“On account of personal reasons, I have decided to step down from my current position effective immediately. 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,” he stated.
Patel, who succeeded Raghuram Rajan as RBI governor in 2016 was to end his three-year-tenure in September 2019. His resignation comes on the heels of months of public confrontation between the RBI and the Modi government over a wide-range of issues, its reserve policies and the central bank’s independence itself.
Prime Minister Narendra Modi is reported to have spoken highly of Urjit Patel’s calibre as an economist and his deep insight and understanding of macro-economic issues.
“The Government acknowledges with deep sense of appreciation the services rendered by Dr Urjit Patel to this country both in his capacity as the Governor and the Deputy Governor of The RBI. It was a pleasure for me to deal with him and benefit from his scholarship,” finance minister Arun Jaitley tweeted.
Reuters quoted former central bank governor Raghuram Rajan as saying that Patel’s resignation is a development that “all Indians should be concerned about.”
Patel’s exit comes in the backdrop of an ongoing face-off between the RBI and the centre, which blew over after deputy governor Viral Acharya in a speech flagged concerns over risks to central bank independence.
Following this speech, the Modi government and the central bank have had several board-level discussions over a wide range of issues.
At the last board meeting, on November 19, both parties had appeared to reach a truce over liquidity concerns and lending restrictions on state-run banks.
The government had also inducted two of its directors to confront Patel and his deputies in the board of the central bank on the policy issues.
As former RBI governor YH Malegam told CNBCTV-18, the resignation is the result of a “combination of what has been going on for a long time” that “could indicate fear that the RBI is becoming an extension of the government”.