Viral Acharya's book reveals, Urjit Patel resigns as RBI governor due to Modi government

New Delhi, 28 July 2020 Tuesday

The relationship between the Modi government and the Reserve Bank of India (RBI) is often the subject of new rumors. Earlier, Urjit Patel's book made some shocking revelations and now Viral Acharya's book has made a big splash. Viral Acharya said that Urjit Patel left his post prematurely because he was not happy with the government. Viral Acharya, in his book 'Fest for Restoring Financial Stability in India', said that the government was trying to undermine the autonomy of the Reserve Bank, so Urjit Patel left early.

Viral Acharya said in his book that during the tenure of Urjit Patel as the Governor from January 2017 to July 2019, many policies were formulated which pushed the economic environment in the country backwards. The principal alleged that the government was reversing prudent measures, making irrational demands. Was encroaching on the autonomy of the RBI. This is why Urjit Patel had to resign prematurely in 2018.

Urjit Patel, former governor of the Reserve Bank of India, said his differences with the then finance minister started with the government's decisions on bankruptcy cases, which were very lenient. Urjit Patel wrote this in his new book Overdraft - saving the Indian saver, in which he did not name anyone but the time he is talking about in mid-2018 was the time when Piyush Goyal was briefly given the post of Finance Minister. This time was between May 2018 to August 2018.

In his book, Patel writes that soft decisions were taken in bankruptcy cases in mid-2018, while for most of the works, the finance minister and Urjit Patel were on the same level in matters related to the cases. In May 2018, the then Finance Minister Arun Jaitley was leading the Bankrupt Law but due to illness he had to be admitted to the hospital and the then Energy Minister Piyush Goyal was given the responsibility of Finance Minister. Speaking to media in 2018, Piyush Goyal spoke of softening the circular and said that no loan can be called NPA after 90 days.

Urjit Patel had resigned from his post eight months ago. Nowhere in his book is there any mention of the relationship between the Reserve Bank of India or its board or the Ministry of Finance. On the other hand, the note ban imposed during Urjit Patel's tenure in 2016 is not mentioned anywhere in the book. About Rs 10 lakh crore of bad loans were recovered during Urjit Patel's tenure. Patel wrote in his book that there should be constant monitoring.

In his book, Urjit Patel describes the financial sector as a problem for the RBI-owned government to provide loans based on government guidelines and directives. He also warned against closing the gap between the government and public sector banks, saying it could increase government debt. He also expressed concern over bringing in SBI-LIC funds launched by the government to bail out real estate projects and said that bringing in a currency credit scheme from the central government is like transferring money. It may be mentioned that they were against the purchase of IDBI Bank by LIC which was announced in August 2018.