Viral Acharya, RBI's deputy governor, quits six months before his term ends

Viral Acharya, the deputy governor of the Reserve Bank of India (RBI), quit six months before the end of his term. He was the youngest deputy governor of the Indian central bank after liberalisation. He had joined the RBI on January 23, 2017 for a term of three years.

“A few weeks ago, 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,” Reserve Bank of India (RBI) said in a short statement Monday.

Consequential action arising from his letter is under consideration of the competent authority, it said.

Since Acharya was appointed by Appointments Committee of the Cabinet headed by Prime Minister Narendra Modi, the resignation would also be accepted by the panel.

This is the second high-profile resignation in the past seven months at the RBI.

Archarya will head to New York, where his family is based, and pursue a teaching job, according to the Economic Times. He will return to the University Stern School of Business (NYU Stern) in August, instead of February 2020, as the CV Starr Professor of Economics.

In December 2018, then RBI Governor Urjit Patel announced his resignation citing personal reasons after the year-long power struggle between the Central government and the Reserve Bank of India (RBI). It is said that Archarya had been uncomfortable since Patel's exit. He also had several differences of opinion with current governor Shaktikanta Das.

Acharya had been differing with Das in the last two monetary policy meetings on both growth and inflation. In the latest monetary policy meeting, Das and Acharya differed strongly on the state of the fiscal deficit and how to account for that, according to an ET report. 

During Patel's tenure, the RBI had been at loggerheads with the Centre over the Finance Ministry’s use of Section 7 of the RBI Act, which granted special powers to the government to issue directions to the central bank. The then Union Finance Minister Arun Jaitely had blamed the RBI for unmanageable figures of stressed assets saying that it failed to check indiscriminate lending between 2008 and 2014 causing NPA crisis in the banking industry.  A new 180-day deadline was set for declaring a loan as an NPA. It said that after 180 days, the stressed account must go to the bankruptcy courts for settlement. The government considered the new regulations as very harsh that left public sector banks in the red. As of now, 11 out of 21 PSU banks are under the RBI watch-list. Two of them, Dena Bank and Allahabad Bank, are also facing restrictions on the expansion of the business.