RBI on Monday confirmed deputy governor Viral Acharya had resigned from his post after media reports said he quit six months before his term was due to end.
RBI said Acharya submitted his resignation citing unavoidable personal circumstances few weeks ago and said he would not be able to continue his term beyond July 23, Reuters reported.
His resignation would mean the RBI is likely to be more dovish over monetary policy and willing to cut interest rates as Acharya, who is in charge of departments that look at monetary policy and exchange rate markets, had been regarded as more of an inflation hawk, economists told Reuters.
Acharya is returning to New York University Stern School of Business in August as the CV Starr Professor of Economics, the Business Standard said.
He had joined the RBI on 23 January 2017 and is the central bank’s youngest deputy governor, post economic liberalisation, the Indian Express reported.
On his resignation, Acharya told the Business Standard: “A schoolteacher once told me: ‘When your work speaks for itself, do not interrupt’.”
According to the daily’s report, Acharya resigned a few weeks before the RBI’s monetary policy committee meeting held earlier this month.
Express reported Acharya had a difference of opinion with RBI Governor Shaktikanta Das over the monetary policy announced on 4 April. The committee decided to reduce the policy repo rate by 25 basis points to 6 per cent. Acharya had reportedly cautioned Das against another repo rate cut.
In October 2018, in an apparent warning to the government, Acharya had warned against undermining a central bank’s independence, The Scroll reported.
Staunchly defending the need for independence, Acharya made public disputes with the government over issues ranging from lending curbs, more cash availability to the non-banking finance companies (NBFCs), to who controls the RBI’s reserves.
“The risks of undermining the central bank’s independence are potentially catastrophic,” Acharya said in his October speech, adding that rash moves could trigger a “crisis of confidence in capital markets”.
Bloomberg says NS Vishwanathan, a deputy governor whose term is due to end in July, may stay on for another term.
Acharya may be succeeded by Michael Patra, an RBI executive director, or Sanjeev Sanyal, principal economic adviser at the finance ministry, the report said.
This is the second high profile resignation in the past six months at the RBI.
In December 2018, Urjit Patel had quit as RBI governor amid growing differences with the government.