The Reserve Bank of India (RBI) on Monday said deputy governor Viral V. Acharya has informed that due to unavoidable personal circumstances, he is unable to continue his term as a deputy governor of the RBI beyond 23 July 2019. On Monday morning, Business Standard reported that Viral Acharya resigned six months before his term ends citing him.
RBI said in a circular, “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. In this connection it is stated as follows: 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. Consequential action arising from his letter is under consideration of the Competent Authority.”
Acharya, who joined the RBI in January 2017 for a three-year term, will return to New York University Stern School of Business in August to teach economics, according to the newspaper report.
The resignation of the deputy governor is no surprise. “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.
According to Nomura, at the margin, the composition of the MPC will likely become incrementally more dovish as Acharya stood on the more hawkish side of the policy spectrum. “Given our view of a likely growth disappointment relative to the RBI’s projections and as we forecast inflation to remain below the target, we expect the MPC to vote for another 25bp rate cut in August (resulting in a cumulative 100bp of cuts in 2019),” the report noted.
Acharya had warned in a speech on October 26 that undermining the central bank’s independence could be potentially catastrophic.
In his last monetary policy committee minutes, Acharya wrote: “Why do old men wake so early? Is it to have one longer day?” wonders Santiago, the old fisherman, in “Old Man and the Sea” by Ernest Hemingway. I found myself preparing and writing these minutes early too, perhaps so I could have one longer drafting day!
Before Acharya, two previous RBI governors resigned before their term ended. Urjit Patel resigned in December last year and Raghuram Rajan announced his exit in June 2016.