Deputy Governor Viral Acharya has asked to leave the central bank not later than July 23, citing "unavoidable personal circumstances", the RBI said in a statement Monday.
Last year, the country witnessed a long-simmering discord between the central bank and the government when reports stated that the Centre had invoked never-before-used powers under Section 7 of the RBI Act allowing it to issue directions to the central bank governor on matters of public interest. But he stayed on. One of the tension points he highlighted was the treatment of the RBI reserves.
Then, on October 26 past year, just three days after the RBI's board meeting, Acharya made a fiery speech on the importance of independent regulatory institutions, a topic he claimed had been suggested by Patel.
Acharya's resignation, furthermore, could be an indication that some differences still continue to exist between the apex bank and government in terms of decision making. This is because state-owned banks have better access to government guarantees. Whether or not he is a casualty of the Narendra Modi administration's attitude towards our institutions, he will be missed for his insights into the monetary scenario, market responses and much more.
Deputy Governor Viral Acharya arrives to attend a news conference after a monetary policy review in Mumbai, December 5, 2018. "Over the near term, that probably seals the deal on another rate cut in August, while further cuts beyond this are a growing possibility", Shilan Shah, senior India economist at Capital Economics, said in a note.
Economy is not the only thing that Acharya is famous for.
Acharya's possible successors include Michael Patra, an executive director at the central bank and a dovish member of the MPC, and Sanjeev Sanyal, the principal economic adviser at the finance ministry, the Business Standard reported.
In the speech (that was delivered just a month before Patel's resignation and the subsequent appointment of retired career bureaucrat Shaktikanta Das as RBI governor), Acharya had said that appointing a non-technocrat to a key position is among the ways in which the independence is compromised.