In a surprise move, the governor of India’s central bank Urjit Patel, above right, stepped down on Monday amid an ongoing conflict with the federal government over its alleged meddling in its functioning,
The move by Patel comes just four days before the Reserve Bank of India’s (RBI) board meeting. In a statement, Patel said he is leaving his current position immediately due to personal reasons.
However, there may be more than “personal reasons” for his resignation.
The RBI and the federal government had been at loggerheads over autonomy of the bank which put too many restrictions on lending loans to small and medium enterprises and had reservations on the Centre gaining access to its reserves.
The government is said to have invoked Section 7 of the RBI Act giving it powers to issue directions to the central bank.
The conflict was mirrored in a speech by Patel’s deputy, Viral Acharya, earlier this month.
RBI deputy governor N.S. Vishwanathan is likely to hold charge as RBI interim head.
Prime Minister Narendra Modi, in his tweet, wrote Patel will be missed immensely. He credited him with bringing order and discipline in the banking system.
Finance Minister Arun Jaitley hailed Patel’s services in various capacities in the RBI. He said it was a pleasure to deal with Patel and learn much from him.
The Congress used the occasion to attack Modi. The party said the prime minister is undermining democratic institutions.