Reserve Bank of India Governor Urjit Patel has resigned, reported news agency Reuters. News agency ANI too confirmed the news moments before his resignation letter was made public. His resignation comes just days before the RBI Board meeting, scheduled for 14 December.
He wrote in his resignation letter, “On account of personal reasons, I have decided to step down from my current position (RBI Governor) effective immediately. It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years.”
He continued, “The support and hard work of RBI staff, officers & management has been proximate driver of Bank’s considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of RBI Central Board & wish them all the best for future.”
Patel was Prime Minister Narendra Modi’s choice to succeed Raghuram Rajan to head the federal bank of India when he appointed as the new RBI chief in September 2016. A month after his appointment, Modi had announced his controversial demonetisation decision by declaring 86% currency in flow illegal. The decision had brought the independence of the RBI and Patel’s role under immense scanner.
Reacting to Patel’s resignation, Modi said, “Dr Urjit Patel is an economist of a very high calibre with a deep&insightful understanding of macro-economic issues. He steered the banking system from chaos to order. He leaves behind a great legacy. We’ll miss him immensely.”
In October, after the rift between the Indian government and the Reserve Bank of India became public, some reports had suggested that Patel may resign. The news of Patel’s possible resignation had rocked the Indian government.
The rift between the RBI and the Modi government turned ugly after Patel’s deputy, Viral Acharya, said that attempts to undermine the central bank’s autonomy could prove to be ‘potentially catastrophic.’
What inflamed the tension further was the statement by Union Finance Minister Arun Jaitley, who blamed the central bank for failing to stop a lending spree during 2008-2014 that left banks with $150 billion of bad bank loans.
This was on the day Patel and other regulators, including the Securities and Exchange Board of India, the Insurance Regulatory and Development Authority and the Pension Fund Regulatory and Development Authority, met Jaitley and other top finance ministry officials at a meeting of the Financial Stability and Development Council to discuss the liquidity crunch.