Reserve Bank of India (RBI) deputy governor Viral Acharya has resigned six months before the end of his term over differences with the incumbent government of Prime Minister Narendra Modi concerning the central banking institution's policies, India Today reported on Monday.
In an unexpected development, RBI deputy governor Viral Acharya quit, almost six months ahead of the end of his three-year term.
Acharya's view has been that the RBI's monetary policy committee (MPC) needs to focus on ensuring that inflation is kept close to the target of 4 (+/-2) percent in a durable way countering the Governor Das's view for a repo rate cut in view of the economic slowdown.
One of the most controversial issues between RBI and government included the demand that RBI shell out more dividend, which was strongly opposed by Acharya.
Viral Acharya had joined the RBI in 2017.
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Last year, the then RBI Governor Urjit Patel had differed with the government on several issues, including transferring the surplus to the government, more credit flow to small units, easing of curbs on public sector banks and funding support to the NBFC sector.
Acharya submitted his resignation letter a few weeks ago saying he was unable to continue his term beyond July 23 due to unavoidable personal circumstances, the RBI said in a release.
Viral Acharya, who was in-charge of the monetary policy department, would return to a teaching position at New York University's Stern School of Business, as per a Business Standard report on Monday. As an independent minded economist, Acharya had on several occasions courted controversy by criticising the government and the finance ministry and raising the question of central bank's autonomy.
Acharya had warned in a speech on October 26 that undermining the central bank's independence could be potentially catastrophic.
Those expectations are however set to change following the change in the central bank's stance to accommodative earlier in June.