Urjit Patel’s tenure as the Governor of the Reserve Bank of India will be remembered not just for demonetisation and cleaning up of the bad loans mess, but also for his abrupt resignation on Monday, making him the second RBI chief to resign since Independence.
“It is unprecedented and is the first resignation by an RBI Governor in decades,” noted a former RBI Governor, who did not wish to be named.
“It seemed that troubles between the RBI and Finance Ministry had ebbed, if not completely been resolved,” noted an economist, expressing surprise that Patel chose to resign now and not earlier.
Patel, the 24th Governor of the RBI, took over on September 4, 2016, after a three-year term as the Deputy Governor in-charge of monetary policy. He still has about nine months left as RBI Governor.
But for the usually quiet Patel, his tenure proved to be tumultuous, starting with the government’s sudden and unexpected decision to demonetise ₹1,000 and ₹500 notes just two months after he took charge.
The RBI remained unusually silent over the decision, but he was made the fall guy for what was seen to be an unprepared move that led to currency shortages across the country, slowdown in economic growth, and hardships to people.
There was also a widespread perception that the RBI, and more importantly, Patel were not consulted.
There were also the usual stand-offs with North Block in the past over policy rates and dividend to be paid. The February 12 circular on non-performing loans was another contentious issue between the two, but the RBI had stood its ground.
Of late, the RBI, under Patel, was also seen to be focussed on governance and compliance by banks, and had cracked the whip on several private sector lenders, including YES Bank and Bandhan Bank.
With an impressive academic background – including a Ph D in Economics from Yale University, an M Phil from University of Oxford, and a B Sc from the University of London – Patel previously worked with the International Monetary Fund and also as a consultant in the Finance Ministry.
Patel, a Kenyan by nationality, took Indian citizenship when he became RBI Deputy Governor. He refused to move into the official bungalow on Carmichael Road and continued to live in his Deputy Governor-days apartment with his ailing mother.
He was also a part of several government-appointed committees, including the Task Force on Direct Taxes (Kelkar Committee), and the Prime Minister’s Task Force on Infrastructure.