RBI Governor Urjit Patel Monday resigned from his post citing personal reasons. Patel has become the first governor since 1990 to step down before the end of his term. Patel had taken over the reins of the RBI from Raghuram Rajan in September 2016 and his term was till September 2019.
The sudden development comes after the government and the RBI broke the ice after a public spat that stretched over months. The central bank and the board on November 19 reached an agreement on providing relief to small and medium firms and easing lending restrictions on some state-owned banks.
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“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,” an RBI statement said. Read in Bengali, Malayalam
“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,” the statement further added.
Asserting that Patel steered the banking system from chaos to order and ensured discipline, Prime Minister Narendra Modi said the former RBI governor was a thorough professional with impeccable integrity. “Dr Urjit Patel is an economist of a very high calibre with a deep and insightful understanding of macroeconomic issues. He steered the banking system from chaos to order and ensured discipline. Under his leadership, the RBI brought financial stability,” Modi tweeted.
“Urjit Patel is a thorough professional with impeccable integrity. He has been in the Reserve Bank of India for about 6 years as Deputy Governor and Governor. He leaves behind a great legacy. We will miss him immensely,” the PM further said.
Dr Urjit Patel is an economist of a very high calibre with a deep and insightful understanding of macro-economic issues. He steered the banking system from chaos to order and ensured discipline. Under his leadership, the RBI brought financial stability.
— Narendra Modi (@narendramodi) December 10, 2018
Finance Minister Arun Jaitley wished Patel the best in his future endeavors and said it was a pleasure to deal with the former RBI governor. “The government acknowledges with deep sense of appreciation the services rendered by 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. I wish Patel all the very best and many more years of public service,” Jaitley said.
The Congress was quick to attack Prime Minister Narendra Modi. “Another one bites the dust. This is the result of our ‘chowkidar’s’ assault on democratic institutions – RBI Governor, Urjit Patel steps down,” the party tweeted.
Former finance minister P Chidambaram, who had claimed last month before the board meeting that Patel could either transfer the Rs 1 lakh crore requested by the Government or resign, said he was not surprised by the RBI governor’s resignation.
“Saddened, not surprised, by Dr Urjit Patel’s resignation. No self-respecting scholar or academic can work in this government. November 19 was the day of reckoning. Dr Patel should have resigned on that day. Dr Patel may have thought that government will re-trace its steps. I knew it would not. Good he quit before another humiliating meeting,” he tweeted.
Speculation of Patel’s exit had gained steam after differences between the RBI and the government spilled out in the open following a hard-hitting speech by RBI Deputy Governor Viral Acharya, where he had stressed on the need to ensure the independence of the central bank.
Acharya had argued that any compromise could be “potentially catastrophic” for the economy. The speech was delivered with the backing of Patel, suggested the footnotes in Acharya’s speech.
It may be recalled that Patel’s relationship with the government had got off a rocky start. Just two months into his tenure, the government announced demonetisation of Rs 500 and Rs 1,000 notes. While Patel remained silent through much of the process of demonetisation and remonetisation, managing the note ban was one of the biggest challenges for him.
The minutes of the 561st meeting of the RBI’s Central Board, which was convened hurriedly in New Delhi at 5.30 pm just before the demonetisation announcement, reveal that the central bank’s directors described the move as “commendable” but also warned that demonetisation “will have a short-term negative effect on the GDP for the current year”.
The RBI also rejected, in writing, two of the key justifications — black money and counterfeit notes. The minutes were signed by RBI Governor Urjit Patel on December 15, 2016, five weeks after the meeting was held.
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