West Bengal Chief Minister Mamata Banerjee reacted strongly to the resignation of Reserve Bank of India (RBI) Governor Urjit Patel on Monday.
Banerjee, who was in the capital today for a meeting with opposition parties ahead of the winter session of Parliament, said that Patel’s resignation has triggered a financial emergency in the country.
“This has never happened before. This is unprecedented. We are deeply concerned,” she said in a tweet.
“The RBI is the custodian of public money. The credibility of all institutions is being destroyed. This is a financial and economic emergency,” Banerjee, the chief of Trinamool Congress (TMC), said.
This has never happened before. This is unprecedented. We are deeply concerned. The RBI is the custodian of public money. The credibility of all institutions is being destroyed. This is a financial and economic emergency
— Mamata Banerjee (@MamataOfficial) December 10, 2018
The Bengal CM also said that the opposition leaders will meet President Ram Nath Kovind to discuss the situation because “financial stability is not there”.
Banerjee’s response came soon after Patel abruptly tendered his resignation following days of a rift between the Centre and the central bank over a host of issues including surplus reserves and bad loans.
Besides Banerjee, Congress president Rahul Gandhi, too, criticised the government over Patel’s resignation alleging that the Bharatiya Janata Party was assaulting institutions such as the CBI, RBI, EC and on the Constitution.
Patel, whose term was to end on September 2019, thus became the first RBI Governor since 1990 to resign from his post.
“On account of personal reasons, I have decided to step down from my current position, effective immediately,” he said in a statement.
“It has been my privilege and honour to serve in the RBI in various capacities over the years,” Patel said.
Thanking the staff of the central bank, Patel said, “The support and hard work of the RBI staff, officers and management has been the proximate drive of the Bank’s considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future.”
Patel, 55, succeeded Raghuram Rajan as the Governor of RBI on 4 September 2016.
Finance Minister Arun Jaitley had criticised the RBI for failing to check indiscriminate lending during 2008 and 2014 that led to the present bad loan or NPA crisis in the banking industry.
“The central bank looked the other way when banks gave loans indiscriminately from 2008 to 2014,” Jaitley said.
The government of the day, he said, was pushing banks to lend which resulted in credit growth in a year shooting up to 31 per cent from the normal average of 14 per cent.
The government had also demand that the RBI hand over its surplus reserves by amending its “economic capital framework”.
Analysts noted that the government’s demand came in the face of a huge fiscal deficit and the need to boost the economy in an election year.
The historic tensions in government-central bank relations were reignited in October when, in a public lecture, RBI Deputy Governor Viral Acharya talked about the independence of the Reserve Bank, arguing that any compromise could be “potentially catastrophic” for the economy.