You are here: Home » Economy & Policy » News
Business Standard

Timeline: How the RBI vs govt story unfolded in lead up to Patel's exit

The relationship between the RBI and the government has been strained for the past several months

Business Standard 

Softening stand? RBI, govt reach truce ahead of Monday's board meeting

Reserve Bank Governor Urjit Patel, who faced the possibility of an unprecedented action from the government over differences on a variety of issues, Monday resigned from his job citing personal reasons.

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 relationship between the and the government has been strained for the past several months.

Here's a timeline of the events leading up to his resignation: Aug 8, 2018: The government appoints S Gurumurthy and cooperative banker and Swadeshi supporter Satish Marathe to the RBI’s central board as independent directors Mid-Sep: The government cuts short the term of central board member and banker Nachiket Mor, also associated with the Bill & Melinda Gates Foundation Oct 10: The government reportedly invokes the never-before-used Section 7 of the Act to force decisions it wants the RBI to take through three letters with over a dozen demands. The RBI replies to these letters a week later Oct 23: The RBI holds a marathon board meet that lasts for around eight hours but remains inconclusive on most issues that government brought in Oct 26: Deputy Governor Viral Acharya goes public to assert the RBI’s autonomy, warns of the wrath of the markets if it is not maintained Oct 29: Another Deputy Governor N S Vishwanathan delivers a speech in Jamshedpur, making clear the RBI’s reluctance to bring down capital levels for banks Oct 31: The government reiterates need for the RBI autonomy as “essential” but calls for better governance of the central bank Nov 3: Economic affairs secretary S C Garg cites improvements in market indices, the rupee and crude to make light of Acharya’s “wrath of markets” remarks Nov 9: Garg says discussions are on to fix an “appropriate economic capital framework for the RBI” and says the government does not want the RBI’s money. Nov 15: RSS ideologue and central board member S Gurumurthy says standoff between the RBI and the government not a “happy thing” Nov 17: Ahead of the RBI board meeting, Finance Minister says growth should not be throttled by squeezing liquidity to the needy sectors Nov 19: A 10-hour RBI central board meeting decides to set up a panel on the economic capital framework for RBI and directs it give forbearances to small businesses Dec 5: Governor refuses to answer queries on frictions between RBI and the government, amid reports of truce between

First Published: Mon, December 10 2018. 23:14 IST