RBI employee union expresses shock over Patel's resignation

The All India Reserve Bank Employees Association has expressed shocked over resignation of central bank governor Urjit Patel,saying one of the trigger points could be transfer of reserves to the government.

Patel, 55, who took over as the 24th governor of the Reserve Bank of India (RBI) on September 5, 2016, resigned Monday citing personal reasons.

"The news has come as a shock for us. Patel's resignation cannot be a sudden thing,"the employee union said.

It claimed the recent dispute between RBI and the government on issues such as transfer of surplus funds to the government could have lead to his resignation.

"Transfer of RBI surplus to the government is one of the biggest bone of contention between the two. A committee was to be set up jointly by the RBI and the government to look into transfer of reserves to the government. We think one of the trigger points could be appointment of members of the committee," the union said.

In its November 19 meeting, RBI's board had decided to constitute a committee of experts to examine the economic capital framework (ECF), the membership and terms of reference of which will be jointly determined by the government and RBI.

The committee will determine the appropriate levels of reserves the central bank ought to hold.

It will have minimum of three people, which will include present and past central bankers, and officials from the finance ministry.

As of June 30, RBI's reserves stood at Rs 9.43 lakh crore.

Meanwhile, All India Bank Employees Association (AIBEA) said Patel's resignation is most unfortunate but in most likelihood has happened in response to the way the government has handled contentious issues such as transfer of reserves and dilution in PCA (prompt corrective action) norms.

"This speaks of government credibility in dealing with economy," the bank union said.