New Delhi / Mumbai: From being considered government’s man on the Mint Street, outgoing RBI Governor Urjit Patel had emerged from the shadows to find his own voice on issues that mattered the most – autonomy and independence of the central bank.
From facing flak for allegedly toeing the government line on the shock decision to overnight junk 86 per cent of the currency in circulation, he overcame all that as he followed “wisdom of an owl” in clamping down on loan defaults and cleaning up bank balance sheets.
Succeeding an outspoken governor, Patel was often considered reticent, rigid, and uncommunicative. He rather appeared as someone reluctant to meet and consult not just finance ministry officials but his own colleagues in the bank. But the 55-year-old Patel, who announced his decision to step down as the RBI Governor, nearly nine months before his three-year term was to come to an end, meticulously conducted the ‘deep surgery’ initiated by his predecessor Raghuram Rajan to clamp down on loan defaulters, while seeking to safeguard the Indian banking system from any collateral damage.
The resignation came just days ahead of the December 14 meeting of the Board of RBI that was to take up issues like governance in the central bank. Patel, who is the first Governor to resign since 1990s, cited personal reasons for the resignation but industry watchers say there were undercurrent since the government cited hereto never-used-before provisions of the law to bring him to negotiating table on issues it felt were of national interest.
The friction between the RBI and the Finance Ministry was attributed to the recalcitrance of Patel, who appeared keen to be seen as a defiant, independent-minded governor of high credibility by resisting the government’s call for increased transparency on the central bank’s reserves (just how much is necessary for stability operations) and for enhanced liquidity so that credit can be eased to money-strapped sectors especially MSMEs.
Hailing from a business family based in Nairobi, Patel, who studied at London School of Economics, Oxford and Yale University, was a Kenyan national until 2013. He acquired an Indian citizenship before he was appointed Deputy Governor of RBI in January 2013. While he maintained central bank’s independence in handling bad loan cases, RBI drew criticism for taking an awfully long time to disclose the final number of junked currency notes that came back to the system.
