Viral Acharya, RBI Deputy Governor Resigns: Central Bank issues clarification without saying if he has resigned or whether it has been accepted.

Moneylife Digital Team 24 June 2019

Economy & Nation

The Reserve Bank of India (RBI) issued a strange ‘‘statement on media reports” about the resignation of Dr Viral V Acharaya, Deputy Governor of the RBI.

The RBI statement, issued by Chief General Manager Yogesh Dalal says, “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”.

Clearly this is not an issue that needs obtuse central bank-speak like its views on interest rates or monetary issues. But RBI’s clarification will only lead to needless speculation, especially since Dr Acharya has another six months to go before his term ends.

If Dr Acharya has indeed resigned a few weeks ago, it would have been in good order for the RBI to make a public disclosure of this fact, state whether the resignation has been accepted or not (Dr Acharya does not seem to have given the central bank a choice) and gone about finding a replacement in a transparent manner.

While regulators are busy imposing disclosure rules on corporates, it is time they began to operate with a bit more openness and transparency, instead of causing needless speculation.

It is useful to remember that this is the second time that RBI is issuing a clarification about the resignation of Dr Acharya. The last time around, on 10 December 2018, when RBI governor Dr Urjit Patel resigned before his term had ended, there was speculation in the media that Dr Acharya had also put in his papers.

After all, it was Dr Acharya’s hard-hitting speech that had thrown into the public domain the acrimony between the government and the central bank over its autonomy, the demand for transfer of reserves to the government and other issues.

The issues quickly snowballed and led to Dr Patel’s resignation and he was replaced by a government favourite, Mr Shaktikanta Das.

This time too, the government wants the RBI to transfer a big chunk of its reserves to the centre and it is speculated that this will happen before the union budget in early July. As recently as last month, The Economic Times had reported that Dr Acharya and the RBI Governor differed sharply on issues driving the monetary policy including the fiscal deficit and interest rates.

So there is clearly more to the resignation than meets the eye, although Dr Acharya has officially attributed his exit to personal reasons without spelling them out.

Comments

User

K G NAGAR

7 years ago

No surprise. Now who is next Govt. intention is very clear. See who is in board of directors of RBI-then chairman of United Western bank which was put under moratorium in 2012 and subsequently merged With IDBI Bank in2013.

K V RAO

Replied to K G NAGAR comment 7 years ago

Please let me know what is the connection between Acharya and United Western Bank?

K V RAO

7 years ago

Not a big act of sacrifice when there is only 6 months to go. RBI never had independence since inception. Knowing this Acharya should not have accepted the post. Further DG's position is nothing to write about. Such positions can even be abolished. Nothing happens to RBI/banking system without DGs. Such positions are equivalent to glorious clerks with huge perquisites which is a burden on exchequer.

Madhu K R V

7 years ago

May be he is becoming famous by submitting resignation just before 6-months to end his term?
No one would talk about it if he doesn't submit the resignation after almost enjoying the term.

Ramesh Bajaj

7 years ago

The RBI must preseve it's Independence.