Television channels CNBC-TV18 and ET Now have speculated that Reserve Bank of India Governor Urjit Patel may consider resigning from his post given a breakdown in relations with the government.
Two significant disturbances i.e. the 10-year benchmark bond yield which rose to 7.87 percent from its previous close of 7.83 percent and rupee’s fall to 73.99 to the dollar from 73.6750 on Tuesday, after touching 74.04 have triggered major turmoil for the RBI Governer.
Moreover, the government has invoked never-before-used powers under the RBI Act that allow it to issue directions to the central bank governor on matters of public interest.
Deputy Governor Viral Acharya said last week that undermining central bank independence could be “potentially catastrophic”.
“It is difficult to believe that the RBI governor will resign because it is unprecedented and would look quite irresponsible and (an) immature step. But it is quite worrisome to see the government trying to continuously interfere into the RBI’s operations.,” said a senior trader at a foreign bank.