Chidambaram hits out at govt after Urjit Patel quits, accuses it of trying to 'grab' RBI reserves

Stating that he was saddened but not surprised by RBI Governor Urjit Patel's resignation, former finance minister P Chidambaram on Monday alleged that no self respecting scholar or academic can work in the NDA Government whose immediate agenda was to to "grab the reserves" of the central bank to meet its fiscal deficit target.

In a series of tweets, the senior Congress leader said one should not make any mistake about the government's intention, which is to make RBI "a Board-managed company".

"Government's immediate agenda is to grab the reserves of the RBI to meet its fiscal deficit target and to get funds for spending in an election year," he said.

Chidambaram said the last meeting of the Reserve Bank of India Board held on November 19 was the "day of reckoning" and Patel should have resigned on that day.

"Dr Patel may have thought that government will re-trace its steps. I knew it would not. Good he quit before another humiliating meeting.

"Saddened, not surprised, by Dr Urjit Patel's resignation. No self respecting scholar or academic can work in this government," he said.

Amid differences between the RBI and the government on a variety of issues, Patel on Monday resigned from his post citing personal reasons.

His resignation was being speculated right from the time the government cited a never-before-used provision of the RBI Act to get him to consider its views on relaxing lending norms for segments such as small and medium enterprises, appropriate size of reserves the central bank must maintain and easing norms for weak banks.

Patel, 55, who took over as the 24th Governor of the central bank on September 5, 2016, had the shortest tenure since 1992.

He was hand-picked by the BJP-led government after his predecessor Raghuram Rajan was denied a second-term.

The RBI has a massive Rs 9.59 lakh crore reserves and the government, if reports are to be believed, wants the central bank to part with a third of that fund -- an issue which along with easing of norms for weak banks and raising liquidity has brought the two at loggerheads.

The government on November 9 had said it was discussing an "appropriate" size of capital reserves that the central bank must maintain but denied seeking a massive capital transfer from the RBI.