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(Photo source: IANS) <ul><li>The Governor of the <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI), <keyword id="6375119" type="DEFINITION" weightage="20" keywordseo="urjit-patel">Urjit Patel</keyword>, just resigned from his post citing ‘personal reasons’.</li><li>This comes at a time when <keyword id="3658" type="COUNTRY" weightage="20" keywordseo="India">India</keyword>'s central bank and its government have been at odds about how much autonomy the RBI should have.</li><li>This is a surprise turn of events, even for those who expected his resignation, as it has come much earlier than speculated. </li></ul>In a surprise move, the governor of the Reserve Bank of India, Urjit Patel, has stepped down from his role citing ‘personal reasons.’ His resignation has been speculated in the past few months in the wake of a much-publicised discord between the Indian government and the central bank. Here’s the full statement by Patel: 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 <div type="ExtQuote" text="“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. 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.”" auname="Urjit R. Patel, 10th December 2018"></div>







































 The rift between the government and India’s central banking institution has been widening over the issue of how much autonomy the bank should have. The Indian government wanted to loosen the restrictions that RBI had placed on banks in the wake of their rising non-performing assets (NPAs) as well as gain access to the RBI’s surplus reserves. Urjit Patel was appointed as the governor of the RBI on 4 September 2016 after Raghuram Rajan resigned from his post on 19 June earlier that same year. Under his tenure, the Indian economy underwent the exercise of demonetisation where 85 percent of the country’s currency was pulled from circulation. Under normal circumstances, Urjit Patel’s term would have lasted till September 2019, but with this announcement, his resignation is effective immediately. 
 
 
 
 
 
 
 
 
 
 
 
 
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 See also: <a href="https://www.businessinsider.in/twitter-erupts-with-reactions-on-urjit-patels-resignation-from-the-reserve-bank-of-india/articleshow/67028029.cms">Twitter erupts with reactions on Urjit Patel’s resignation from the Reserve Bank of India</a> <a href="https://www.businessinsider.in/question-of-autonomy-as-the-indian-government-tries-to-strong-arm-the-countrys-central-bank-its-governor-threatens-to-resign/articleshow/66446649.cms">Question of autonomy — As the Indian government tries to strong arm the country’s central bank, its governor threatens to resign</a> <a href="https://www.businessinsider.in/after-weeks-of-tension-the-reserve-bank-of-india-gives-in-to-some-of-the-central-governments-demands-while-retaining-its-independence/articleshow/66705908.cms">After weeks of tension, the Reserve Bank of India gives in to some of the central government's demands while retaining its independence</a>

Reserve Bank of India governor Urjit Patel resigns citing ‘personal reasons’

(Image Credit- IANS) <ul><li><keyword id="6375119" type="DEFINITION" weightage="20" keywordseo="urjit-patel">Urjit Patel</keyword>, the governor of the Reserve Bank of India, has resigned from his post on the central bank’s board. </li><li>Reactions from officials range from ‘I told you so’ to commending the governor’s tenure in office. </li></ul>Twitter exploded with reactions within minutes of Urjit Patel, the governor of the Reserve Bank of India (RBI), announcing his resignation from his post on the board, citing ‘personal reasons’. Urjit Patel had earlier threatened to resign from the RBI with the widening rift between the government and the Reserve Bank of India — especially over the question of the central bank’s autonomy — it was reported that both parties had ultimately reached a ‘truce’. While some had speculated that the governor would resign, nobody had the exact date on their cards and the decision rolled in a little earlier than expected. With the general elections around the corner, reactions from politicians and fellow academicians flew in — ranging from support over Patel’s decision to how the current government is creating a hostile environment that’s not conducive for efficient decision-making. <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword>: ‘Urjit Patel leaves a great legacy, under his leadership, the RBI brought financial stability’ 
	
	
	
	
	
	
	
	
	<div type="twitter" handle="narendramodi" handlename="Narendra Modi" image="http://pbs.twimg.com/profile_images/718314968102367232/ypY1GPCQ_normal.jpg" favoritecount="10119" retweetcount="2356" status="Dr Urjit Patel is an economist of a very high calibre with a deep and insightful understanding of macro-economic is… https://t.co/DyZUxKIXPv" createdat="1544444710000" id="1072104938908508161"></div>



















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 <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword>: ‘Wish Dr. Patel all the very best’ 
 
 
 
 
 
 
 
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 Congress: ‘Another one bites the dust’ 
 
 
 
 
 
 
 
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 Subramanian Swamy: ‘It is a direct consequence of FM blaming him publicly yesterday for NPAs.’ 
 
 
 
 
 
 
 
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 AAP: ‘Demonetisation was just a move to benefit cronies.’ 
 
 
 
 
 
 
 
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 P. <keyword id="6362104" type="LOCATION" weightage="20" keywordseo="chidambaram">Chidambaram</keyword>: ‘Saddened, not surprised’ 
 
 
 
 
 
 
 
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 See also: <a href="https://www.businessinsider.in/reserve-bank-of-india-governor-urjit-patel-resigns-citing-personal-reasons/articleshow/67026294.cms">Reserve Bank Of India Governor Urjit Patel Resigns Citing ‘Personal Reasons’</a> <a href="https://www.businessinsider.in/question-of-autonomy-as-the-indian-government-tries-to-strong-arm-the-countrys-central-bank-its-governor-threatens-to-resign/articleshow/66446649.cms">Question of autonomy — As the Indian government tries to strong arm the country’s central bank, its governor threatens to resign</a> <a href="https://www.businessinsider.in/after-weeks-of-tension-the-reserve-bank-of-india-gives-in-to-some-of-the-central-governments-demands-while-retaining-its-independence/articleshow/66705908.cms">After weeks of tension, the Reserve Bank of India gives in to some of the central government's demands while retaining its independence</a>

Twitter erupts with reactions on Urjit Patel’s resignation from the Reserve Bank of India

<ul><li>The Indian government is mulling over invoking <keyword id="6325500" type="UNKNOWN" weightage="20" keywordseo="section-7">Section 7</keyword> of the <keyword id="6354335" type="ORGANIZATION" weightage="20" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword> (RBI) Act, a provision which allows the central government to issue directives to the bank regulator. </li><li>The government has sent three letters to Reserve Bank of India under Section 7 (1) to seek consultation over various issues like the economy’s liquidity crunch and weak banks. </li><li>The bank’s governor, <keyword id="6375119" type="PERSON" weightage="20" keywordseo="urjit-patel">Urjit Patel</keyword>, has threatened to resign if the government does not back down. </li></ul>The Indian government and the country’s apex bank, the Reserve Bank of India (RBI), are locking horns over the latter’s autonomy. While the RBI believes it should continue to make decisions on its own, the government of India believes that it should have some say in how they’re handling the economy — by <a href="https://www.livemint.com/Industry/fzKfeJ9KliesX4oQ4LEkdJ/The-history-of-the-contentious-RBI-Act-Section-7.html">invoking Section 7</a> of the <keyword id="540275" type="PERSON" weightage="20" keywordseo="RBI-Act">RBI Act</keyword>. By putting that section in play, the government can issue orders to the central bank, which it will then have to follow — regardless of whether not it believes the move is correct. The central government has already started using Section 7(1) of the RBI Act. In fact, it <a href="https://www.livemint.com/Industry/fzKfeJ9KliesX4oQ4LEkdJ/The-history-of-the-contentious-RBI-Act-Section-7.html">sent three letters</a> to RBI seeking consultation. These letters include directives on how to ease the norms for prompt corrective action (PCA) and address the liquidity crunch that non-banking financial companies (NBFCs) are facing. In response to these injunctions, RBI’s governor, Urjit Patel, has <a href="https://timesofindia.indiatimes.com/business/india-business/rbi-governor-may-consider-resigning-after-rift-with-government-report/articleshow/66440506.cms">threatened to resign</a>. The Ministry of Finance, though unwilling to share details in the public domain, has stated that <a href="http://pib.nic.in/PressReleaseIframePage.aspx?PRID=1551317">they are officially consulting with the RBI</a> on how to proceed with Section 7. 
 
 
 
 
 
 
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 What’s the big deal about Section 7? In the 71 years of its independence, this the first time that any government in power will be using the provision. Never before has the government questioned or attempted to correct the issues of the money by strong arming the country’s apex money regulator. The section gives exclusive rights to the central government to direct RBI, which in any other case, does not take direction from any governing body in India. Even during the crisis of 1992 when liberalisation-privatisation-globalisation (LPG) was implemented or, the more recent, global recession of 2008, the government did not feel the need to invoke Section 7 of the RBI Act. The RBI and the Indian government have been muscling with each other due to opposing points of view over ‘prompt corrective action’ (PCA). While Indian government wanted RBI to relax the lending rules for banks issue loans so that it would reduce pressure on the Ministry of Micro, Small and Medium Enterprises (MSMEs), the RBI did not agree.

Question of autonomy — As the Indian government tries to strong arm the country’s central bank, its governor threatens to resign

New Delhi, Jun 19 () Former Reserve Bank governor Urjit Patel will take charge as chairman of the National Institute of Public Finance and Policy (NIPFP) from June 22, the economic think tank said on Friday.       Patel will replace Vijay Kelkar, who assumed office on November 1, 2014       "National Institute of Public Finance and Policy is privileged to have Dr. Urjit Patel, former Reserve Bank Governor, as its Chairperson for a four-year term commencing June 22, 2020," the economic think tank said in a statement.        Patel on December 10, 2018, had unexpectedly resigned four days ahead of a crucial meeting of the board of the central bank that could have discussed issues of simmering differences with the government.          Patel's three-year term was to end in September 2019 and he was eligible for a second term like most of his successors barring a few like his outspoken predecessor Raghuram Rajan. "NIPFP records its deep sense of appreciation and gratitude for the significant contributions made by the outgoing Chairman, Dr. Vijay Laxman Kelkar during his tenure which has immensely helped the institute towards scaling to its present level of growth and effectiveness," it added. BKS MR MR

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