The head of India's central bank steps down for 'personal reasons'

  • Urjit Patel, the head of India’s central bank has resigned for “personal reasons.”
  • His departure comes five days after the Indian government invoked special powers that would give it more say on some aspects of monetary policy.
  • Watch the Indian rupee trade live.

The head of the Reserve Bank of India has resigned for “personal reasons,” according to a statement put out by the central bank on Monday morning.

“On account of personal reasons, I have decided to step down from my current position effective immediately,” Urjit Patel said in a press release.

“It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years. The support and hard work of RBI staff, officers and management has been the proximate driver 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’s resignation comes just five days after the Indian government announced it was invoking the never-before-used special powers under Section 7 of the RBI Act, which allows it consult on things like the central bank’s capital reserves and liquidity problem in non-banking financial companies, according to the Indian business publication The Financial Express.

Patel was named head of India’s central bank in August 2016, following the departure of Raghuram Rajan, who returned to academia.

It is unclear who is in line to be the next central-bank head.

“The most worrying scenario for investors would be if the government appointed someone from the finance ministry,” according to a note put out by Mark Williams, Capital Economics’ chief Asia economist.

“But with two successive governors bowing out under pressure from the government, whoever comes next will have their work cut out to convince markets and investors that the RBI is focused on stabilising inflation close to target.

The Indian rupee was down 0.75% at 71.3375 per dollar.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.