FULL COVERAGE | Urjit Patel Resignation: All you need to know about RBI Governor’s exit

By: | Updated: December 11, 2018 11:27 AM

Urjit Patel was appointed the 24th governor of the RBI on September 2016 for a three-year term and was heavily criticised for his silence on demonetisation, which was announced just 2 months after his appointment.

Urjit Patel exit adds to India’s risk as PM Narendra Modi gears up for vote.

After a fractious faceoff with the Narendra Modi-led government over the liquidity crunch in the economy, the RBI Governor Urjit Patel resigned on Monday from his post with immediate effect citing ‘personal reasons’. Urjit Patel’s resignation, which came 10 months ahead of his term, is being seen a result of trust deficit between the central bank and the ruling government. According to many experts, this development can trigger a major crisis in the politico-economic sphere of the country.

In the recent past, several media reports said that Urjit Patel could resign after the government’s decision to invoke the never-used-before special powers under Section 7 of the RBI Act to initiate consultation on a range of issues such as the Prompt Correct Action (PCA) norms, among others.  Urjit Patel was appointed the 24th governor of the RBI on September 2016 for a three-year term and was heavily criticised for his silence on demonetisation, which was announced just 2 months after his appointment.

Check Financial Express’ continuing coverage on Urjit Patel’s resignation as RBI Governor

What happens now

Urjit Patel resigns as RBI Governor; now, what’s next?
Even as most saw Reserve Bank of India and Modi government reaching truce, RBI Governor Urjit Patel tendered his resignation on Monday. He cited ‘personal reasons’ behind the exit. However, the sudden decision to quit has raised a couple of pressing worries. First, how will the stock markets react? Second, and the most important, who will be the next RBI Governor?

After Urjit Patel, who? This senior most deputy governor may be made interim head
Urjit Patel, who had a run in with the government over autonomy of the central bank, resigned Monday from his post citing “personal reasons”, creating a crisis in the RBI.

Surjit Bhalla resigns from PMEAC; PM Modi loses another lieutenant after Urjit Patel
Prime Minister Narendra Modi has accepted the resignation of economist Surjit Bhalla as part-time member of his Economic Advisory Council (EAC), the PMO said on Tuesday.

Moody’s on Urjit Patel: Govt attempt to curtail RBI Independence credit negative
Patel’s resignation came just 4 days ahead of the December 14 meeting of the Reserve Bank that could have discussed issues of simmering differences with the government.

Hope for smooth transition with approach acceptable to all: India Inc on RBI Governor’s resignation
India Inc Monday said it hopes for a smooth transition and “an approach acceptable to all” after RBI Governor Urjit Patel’s resignation, citing liquidity and credit offtake issues in the financial sector. Patel, who had a run in with the government over autonomy of the central bank, Monday resigned from his post.

Opinion

RBI reduced to a government department
Urjit Patel’s resignation shows up the govt in a poor light, of one unwilling to accept an independent RBI Governor.

Urjit Patel: The vigilant owl flies out in protest, as the nest comes under attack
Patel’s three-year tenure was scheduled to end early September 2019 and he had hinted at rate cuts in the future if the RBI continues to see a dip in inflation.

Markets in shock

Urjit Patel’s resignation comes at a sensitive time, to dampen sentiments, says DBS
The immediate resignation of Reserve Bank of India Governor Urjit Patel comes at a sensitive time, when negotiations with the government to iron out differences on key regulatory aspects are ongoing, the Singapore banking group, DBS, said Tuesday.

Urjit Patel exit adds to India’s risk as PM Modi gears up for vote
Urjit Patel’s shock exit as governor of the Reserve Bank of India dealt investors another bout of monetary policy uncertainty when they were already bracing for an electoral test of Prime Minister Narendra Modi.

Urjit Patel’s resignation roils nervous India markets
Urjit Patel quit on Monday citing personal reasons, a decision that some investors took as a new fissure in the Reserve Bank of India’s relationship with Prime Minister Narendra Modi’s government.

Urjit Patel resignation: Expect markets volatility for some time
While both the stock and markets could settle down should a new RBI governor be appointed soon, the fact is India’s markets have been performing poorly in 2018, being hugely over-valued even as corporate earnings have been very ordinary.

Sebi, exchanges step up vigil as volatility looms over state poll results, RBI Governor’s exit
Capital markets regulator Sebi and the stock exchanges have stepped up their surveillance systems to keep manipulative forces in check amid an extreme volatility expected on Tuesday due to the sudden resignation of RBI Governor Urjit Patel and the state assembly results.

Here’s what transpired

Urjit Patel resigns: Govt’s push for more power to RBI board was the trigger
In a terse statement issued after the end of market hours, Patel, the 24th RBI governor, who had 268 days to go before his three-year term ends on September 4 2019, cited ‘persons reasons’ for the decision.

Urjit Patel resignation: Power erosion may have weighed on RBI chief’s exit decision
Urjit Patel’s surprise resignation as the RBI governor seems to have been precipitated by the long-simmering tussle between the government and the central bank over a raft of vexed issues.

Urjit Patel’s resignation: 7 flashpoints between RBI and Modi government
Urjit Patel, 55, who took over as the 24th Governor of the central bank on September 5, 2016, had the shortest tenure since 1992. In the past few months, both RBI and Modi government have been locking horns on issues ranging from interest rates to reserves.

Urjit Patel resigns as RBI governor; cites personal reasons
On account of personal reasons, I have decided to step down from my current position effective immediately, said Urjit Patel.

Conflict between RBI and government not new: Here’s what happened in past
The longest-serving RBI governor to resign was Benegal Rama Rau (July 1, 1949 to January 14, 1957) who was forced to quit after differences with the then finance minister TT Krishnamachari.

What PM Narendra Modi said

Here’s what PM Modi said about Urjit Patel after his resignation as RBI governor
Urjit Patel steered the banking system from chaos to order and ensured discipline. Under his leadership, the RBI brought financial stability, PM Modi said.

Politicians jump in to react

Rahul Gandhi on Urjit Patel’s exit: We have to stop BJP’s assault on institutions
The opposition seized the opportunity to launch a fusillade at the central government accusing it of assaulting and undermining India’s institutions, from CBI to RBI, and resolved to “work together to defeat the BJP, RSS combination.”

 

RBI Governor Urjit Patel’s resignation ‘severe blow’ to nation’s economy, says former PM Manmohan Singh
Former prime minister Manmohan Singh Monday termed RBI Governor Urjit Patel’s resignation as “very unfortunate” and said it was a “severe blow” to the country’s economy. Singh said it will be “foolhardy” to diminish institutions for short-term political gains.

Urjit Patel eased out by Centre to bring in someone ‘more pliable’, says Arvind Kejriwal
Delhi Chief Minister Arvind Kejriwal on Monday alleged that RBI governor Urjit Patel was eased out by the BJP-led NDA government at the Centre to bring in a “more pliable” person to fill the post. “RBI governor Urjit Patel has been eased out since he refused to allow the Modi govt to plunder Rs three lakh crore of RBI reserves,” he said.

Urjit Patel’s resignation will be bad for economy, warns Subramanian Swamy; gives this advice to PM Modi
Senior BJP leader and Rajya Sabha member Subramanian Swamy on Monday warned that Urjit Patel’s resignation as Reserve Bank of India (RBI) governor will be bad for the economy.

RBI Governor’s “forced” exit blot on India’s monetary and banking system: Congress
BJP government has unleashed a defacto financial emergency. The country’s reputation and credibility is now at stake,” senior Congress leader Ahmed Patel said.

Raghuram Rajan weighs in

Raghuram Rajan reacts to Urjit Patel’s resignation; says ‘Dr Patel has made a statement’
Raghuram Rajan on Monday reacted to Urjit Patel’s decision to step down as Reserve Bank of India (RBI) governor and said that he has made a statement that the autonomy of the central bank should not be undermined.

 

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