RBI Deputy Governor Acharya quits six months before end of term

Ann Santiago
June 25, 2019

"Frictions between him and the government on issues related to central bank independence had come to the fore", said Nomura in a note on Monday.

His departure is significant as it comes just a little more than six months after the resignation of Urjit Patel from the post of RBI Governor. He considered this independence crucial for the country's economic progress and financial stability, and had even warned that any government undermining the banks' authority would face the wrath of financial markets and economic fires. However, eyebrows have been raised given Acharya's past vocal stand against the Centre, at a time when the fractious relationship between the RBI and the government had reached epic proportions.

Before Acharya, two previous RBI governors resigned before their term ended.

Then, on October 26 past year, just three days after the RBI's board meeting, Acharya made a fiery speech on the importance of independent regulatory institutions, a topic he claimed had been suggested by Patel.

Contrary to expectations, the nine-and-a-half hour long meeting ended pretty amicably, with the apex bank backing-off from its confrontationist stand and agreeing to initiate discussions on almost all the issues that the Centre had raised with it.

A statement on the RBI site said: Reports have appeared in certain sections of the media that Viral V Acharya, Deputy Governor of the Reserve Bank of India (RBI) has resigned from his post.

His resignation would also mean the RBI is likely to be more dovish over monetary policy and willing to cut interest rates, economists said.

Flagging the risks of fiscal slippage in his last MPC meeting earlier this month, Acharya cautioned against any further soft approach by the RBI.

Viral Acharya, deputy governor, RBI. Among the most prominent and controversial issues between RBI and government where he was involved included the demand that the central bank shell out more dividend, which was strongly opposed by Acharya.

"A few weeks ago, Dr. Acharya submitted a letter to the RBI informing that due to unavoidable personal circumstances, he is unable to continue his term as a Deputy Governor of the RBI beyond July 23, 2019".

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