HYDERABAD: In an unexpected development, RBI deputy governor Viral Acharya quit, nearly six months ahead of the end of his three-year term.
Confirming the same, the central bank in a statement on Monday said, “A few weeks ago, Dr Acharya submitted a letter to the RBI informing that due to unavoidable personal circumstances, he is unable to continue his term as a Deputy Governor of the RBI beyond July 23, 2019. Consequential action arising from his letter is under consideration of the Competent Authority.”
Acharya, a Professor at the New York University’s Stern School of Business joined the banking regulator in January 2017 and his term was to expire next February.
RBI sources told Express that ‘the issue was very much on the table, though the timing was unexpected. “The government should act quick and appoint a deputy governor soon. It cannot be an internal replacement,” he added.
It may be noted that Acharya was in the government’s cross-hairs last October opposing the centre’s demand for transfer of RBI’s excess reserves.
In a sensational speech, he stressed the need for RBI’s independence and the importance of a central bank’s autonomy. Invoking Argentina’s precedent, he warned that the governments that don’t pay heed to their central banks would certainly attract ‘the wrath of the markets.’
The speech was in response to the government’s insistence on getting its way on a host of issues including management of bad loans, credit to MSMEs and liquidity. Board members were at loggerheads in a stormy meeting in October that stretched for hours but ended inconclusively.
This prompted Acharya to go public, expressing his disappointment through a public speech, which rattled the government.
Though officials in the Ministry of Finance initially tried to smoke the peace pipe at the central bank’s meeting last November, eventually, it led to the exit of the then RBI Governor Dr Urjit Patel the following month.
Acharya was one of the outspoken deputy governor’s and had used public speeches as a medium to convey his ideas and proposals including setting up a bad bank or the need to pursue privatisation and banking consolidation.
