RBI Governor Urjit Patel. Photograph:( Reuters )
The RBI governor had been tussling with the central government of late over the issue of the bank's reserve funds and autonomy.
RBI Governor Urjit Patel has resigned, saying he was doing so for "personal reasons".
"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," Patel said in a statement.
"Support and hard work of RBI staff, officers and 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 and wish them all the best for future," he added.
Pointedly, he made no mention of the finance ministry or the government with which he had been tussling with of late over the issue of the bank's reserve funds.
The government was of the opinion that the bank should hand over a larger share of them to the government.
The government was also keen that the central bank free up credit — by loosening its curbs on the non-banking financial sector — for small and medium enterprises.
The government had wanted to kick-start growth. (A general election is to be held before May next year.)
Patel is the first RBI governor to step down before completing his term since 1990.
The larger battle between the government and Patel had devolved down to one of autonomy. RBI Deputy Governor Viral Acharya had recently warned that any government that does not respect the central bank's financial autonomy will have to face the wrath of the markets.
The government however reportedly invoked Section 7 of the RBI act which allows it to issue directions to the central bank. The section has never before been invoked in independent India.
"We will miss him immensely," Prime Minister Narendra Modi said in a pair of tweeets after Patel announced his departure.
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
Dr. 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.— Narendra Modi (@narendramodi) December 10, 2018
"He steered the banking system from chaos to order and ensured discipline. Under his leadership, the RBI brought financial stability," Modi added.
Finance Minister Arun Jaitley also put out a pair of tweets, saying "It was a pleasure for me to deal with him and benefit from his scholarship."
The Government acknowledges with deep sense of appreciation the services rendered by Dr. 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. (1/2)— Arun Jaitley (@arunjaitley) December 10, 2018
I wish Dr. Patel all the very best and many more years of public service. (2/2)— Arun Jaitley (@arunjaitley) December 10, 2018
He added that "I wish Dr. Patel all the very best and many more years of public service."