The economist had come under increasing criticism from the government, especially finance minister Arun Jaitley, over non-performing assets (NPAs) and autonomy of the RBI
New Delhi: Reserve Bank of India (RBI) governor Urjit Patel is likely to step down from his position on Wednesday. Official sources, requesting they not be named, told MyNation that Patel would relinquish his post as the head of the top custodian of the country’s banks on his own volition.
Patel had come under increasing criticism from the banking industry as well as the government over his handling of non-performing assets (NPAs) and his stance on the autonomy of the RBI. There is also a rumoured rift with finance minister Arun Jaitley.
The matter apparently precipitated Friday onwards, when hours before he was about to chair the Financial Stability and Development Council meeting, Jaitley questioned the role of RBI in the spike in bad loans between 2008 and 2014.
Jaitley said the banks indulged in indiscriminate lending during this period and the RBI looked the other way. The FM said that total credit went up three times in 2014, starting 2008 as the top bank pushed the reality under the carpet and total bank credit in the country went up from Rs 18 lakh crore in 2008 to Rs 55 lakh crore by 2014 which led to the liquidity crisis.
The rift between Patel and the government came into public limelight when deputy governor Viral Acharya last Friday hinted at government interference and warned the government over sapping the independence of the RBI. Acharya also revealed that the subject of his speech was inspired by Patel and said that governments that did not respect the autonomy of the central bank would “incur the wrath of financial markets and ignite an economic fire” to their own peril.
Last Updated 12:20 PM IST