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'All Indians Should be Concerned': Raghuram Rajan Sounds Alarm After Urjit Patel Quits RBI

'Resignation by a government servant is a note of protest, when faced with circumstances they cannot deal with,' Rajan said.


Updated:December 10, 2018, 8:00 PM IST
'All Indians Should be Concerned': Raghuram Rajan Sounds Alarm After Urjit Patel Quits RBI
File photo of Raghuram Rajan

New Delhi: Former RBI Governor Raghuram Rajan on Monday termed Urjit Patel’s resignation as a ‘mark of protest’ and added that every Indian must be concerned, implying the magnanimity of the problem.

The statement came after Patel stepped down from his post citing personal reasons. Patel's resignation comes days after Finance Minister Arun Jaitley’s scathing criticism of the central bank’s “lending spree”.

Patel, who cited “personal reasons” behind his decision, was in a conflict with the Union finance ministry over matters related to the bank's independence.

"Believe resignation of RBI Governor Urjit Patel is matter of great concern. Resignation by a government servant is a note of protest, when faced with circumstances they cannot deal with," said Rajan. “All Indians should be concerned about governor Patel's resignation,” he added.

The market will definitely see a knee-jerk reaction in opening tick amid likely uncertainty over the next RBI governor, how the equation will be between the government and the central bank among other things. After opening reaction, the focus of the market will shift to elections' results, Siddharth Sedani, Vice President-Equity Advisory, Anand Rathi Shares and Stock Brokers, said.

He believes the 10,000 levels on Nifty should not be broken unless and until any worst outcome comes from elections. As the Nifty Bank and banks stocks are likely to fall sharply, he advised buying HDFC Bank, and also Asian Paints, Hindustan Unilever and Aditya Birla Fashion.

There were speculations going on recently that Patel could resign due to a rift between the government and RBI. The government had demanded a relaxation in PCA norms for banks, so they can lend more. The Finance Ministry reportedly wrote to the central bank invoking Section 7 of the Banking Regulation Act (RBI), which states that directions can be issued to RBI. RBI was reluctant to do so initially, however, after a Board meeting, it loosened certain norms.

"On account of personal reasons, I have decided to step down from my current position effective immediately. It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years," the governor said in a statement.

"The support and hard work of RBI staff, officers and management has been the proximate driver of the Bank’s considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future," he said.

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