India to Lose Outspoken Central Banker as Acharya Resigns

Dr. Viral V Acharya | @SIBMBengaluru  Twitter

Dr. Viral V Acharya | @SIBMBengaluru Twitter

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 in 10 December a year ago which included specific mentions of points of differences like government eying RBI's capital buffers. According to RBI, Acharya is looking to stay on his post till 23rd July and his resignation is now under consideration of "competent authority".

The final report of the committee set up by jointly by the RBI and the government to examine the RBI's Economic Capital Framework (ECF) is expected this week, while official sources in New Delhi said there is lack of consensus in the ECF panel over the transfer of capital and reserves to the government.

Acharya, who will now return to the New York University's Stern Business School in August instead of in 2020, said he felt that the RBI has made good progress in earning its independence, pointing to the formation of the rate-setting monetary policy committee.

Pressed for further comment on the reason for his resignation, Acharya told the Business Standard: "A schoolteacher once told me: "When your work speaks for itself, do not interrupt". The government had also packed the RBI board with its own nominees, who were vocal about their disagreements with Patel and his deputy governors.

His departure is significant as it comes just a little more than six months after the resignation of Urjit Patel from the post of RBI Governor.

But the new governor and Acharya had contradictory views, reportedly making the latter increasingly uncomfortable.

In a surprise move, Acharya has resigned from his position at the RBI merely six months ahead of the scheduled end of his three-year term. The process for finding Vishwanathan's successor has been put on hold.

Acharya had famously called himself "Poor man's Raghuram Rajan" after the former RBI head who had paved the way for modernization in the banking system by allowing payment banks.

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-demonetisation.

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