Reserve Bank of India governor Urjit Patel may consider stepping down from the post following Finance Minister Arun Jaitleys scathing criticism of the central banks lending spree, CNBC-TV18 quoted sources as saying.
“RBI governor may even consider resigning. All options on the table,” the report quoted a source familiar with the matter as saying. It quoted another source as saying that there is “irreversible breakdown between RBI governor and the government”.
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Warning of more bad news, former finance minister and senior Congress leader P Chidambaram cited reports as saying that the government has invoked Section 7 of the RBI Act. If, as reported, Government has invoked Section 7 of the RBI Act and issued unprecedented directions to the RBI, I am afraid there will be more bad news today, he said.
Jaitley had on Tuesday blamed the RBI for failing to stop a lending spree between 2008-2014 that left banks with huge bad debts, inflaming a row that recently erupted between the government and the central bank.
On Friday, RBI Deputy Governor Viral Acharya warned that undermining a central bank’s independence could be “potentially catastrophic”, in an indication that it is pushing back hard against government pressure to relax its policies and reduce its powers ahead of a general election due by next May.
