RBI Deputy Governor Viral Acharya quits six months before his term

RBI Deputy Governor Viral Acharya, who was in-charge of the monetary policy department, has resigned on Monday (June 24), six months before the scheduled end of his term.

This is the second high profile resignation in the past six month at the Reserve Bank of India (RBI).

In December, governor Urjit Patel resigned nearly nine months before the end of his schedule term over differences with the government.

Acharya had joined the central bank on January 23 last year after Patel was elevated to the post of governor in September 2016.

The RBI is now left with three deputy governors, N S Vishwanathan, B P Kanungo and M K Jain.

Acharya, a New York University economics professor, who once called himself the ‘poor man’s Raghuram Rajan’, was appointed for three years.

He took over at a time when the central bank was facing criticism for repeated changes in the rules related to deposit and withdrawal of money, post-demonetization.

Also watch: RBI’s booster dose to the economy

Speculation about Acharya’s exit had started on the day of his boss’s resignation, forcing the RBI to deny it then.

Acharya went public with his thinking on the sensitive topic of central bank independence during a speech at the peak of the run-ins between the Mint Road and the Government that culminated in Patel’s departure on December 10, 2018, which included specific mentions of points of differences like the government eyeing RBI’s capital buffers.

Citing an Argentinian example, where governor Martin Redrado’s resignation over differences with the government was not taken kindly, Acharya had warned of the consequences that await.

Governments that do not respect central banks’ independence will sooner or later incur the wrath of financial markets, ignite economic fires, and come to rue the day they undermined an important regulatory institution; their wiser counterparts who invest in central bank independence will enjoy lower costs of borrowing, the love of international investors, and longer life spans, he had said in the October 26, 2018 speech delivered in Mumbai.