Economy

RBI Governor Urjit Patel resigns citing personal reasons

December 10, 2018 17:29·
Urjit Patel The third RBI Governor to resign

Urjit Patel The third RBI Governor to resign

Citing "personal reasons", the governor stated his intention to step down from the post with immediate effect.

Earlier Patel resigned as RBI Governor, almost 9 months ahead of his three-year tenure was to come to an end.

In a statement released by Mr Patel, he said he stepped down on "account of personal reasons". It has been my privilege and honour to serve in the RBI in various capacities over the years.

Notably, Urjit Patel was appointed after former RBI Governor Raghuram Rajan was denied a second term by PM Narendra Modi-led NDA government. "The previous meeting was held in such cordial atmosphere that it comes as a shock", he said. ".Modi thinks that he's the biggest economist and he doesn't need them, so they are resigning", ANI quoted Sibal as saying.

"The resignation is a clear sign of the government trying to interfere with the working of the RBI", he added. His tenure was slated to end in September 2019.

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This marks a rare case of a serving governor leaving his job midway through his five-year term.

Reports of a full-blown tussle between the central bank and the government came out in the open when in a speech, RBI Deputy Governor Viral Acharya made a scathing statement about the independence of the central bank, and argued that "Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution". All directors said media had created a wrong perception while inside it was different. "That makes it even more surprising", said Gurumurthy. Government must take extreme care in its relationship further with RBI.

His exit comes at a time when India, which is closing in on Italy to become home to banks with the worst bad-loan ratio among major economies, is delivering a bitter pill to resuscitate its banking sector.

"You see (between) 2008 to 2014, after the global economic crisis, to keep the economy artificially going, banks were told open your doors and lend indiscriminately", Jaitley said at India Leadership Summit organised by US-India Strategic Partnership Forum. However, it spilled over into regulation, something the central bank believes is its exclusive domain.

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