Citing personal reasons Reserve Bank of India Governor, Urjit Patel has stepped down from his post. Patel, 55, took over as the 24th Governor of the central bank on September 5, 2016, for a term of three years.
He had the shortest tenure since the year 1992.
“On account of personal reasons, I have decided to step down from my current position effective immediately,” Patel said in his letter.
The RBI and the government have been at loggerheads since October on issues over whether the RBI has been too hawkish in its stance towards lenders and the economy has given a drop in the inflation rate and signs of slower growth, as well as in the face of defaults by a major lender.
The government was seen to be putting up pressure on the bank to release the reserves, which, according to critics would help boost the economy in an election year.
Last November, the board met for more than nine hours in Mumbai to resolve the differences between them but, it ended on a conciliatory note. The bank agreed to set up a panel on sharing surplus reserves and restructure loans of small businesses up to Rs. 25 crores.
Sources say that the RBI has an excess reserve of Rs. 3.6 lakh crore, which according to the government, can be used for development. The bank contends that keeping extra reserves are essential in view of possible emergencies.
S Gurumurthy, one of the government-nominated members of the Board, had said while studies suggest that reserves could be 12 to 18.7 percent of assets, the RBI has 27-28 percent, which amounts to 3.6 lakh crore.