August 31, 2026
#Business

What’s next for India’s central bank after Urjit Patel era ends

The exit of Urjit Patel as governor of the Reserve Bank of India was the culmination of months of simmering tensions between the government and the central bank.

In a way, it gives the government the opportunity to do what it wants: name a new governor who is more willing to do its bidding; extract more capital from the central bank to plug its budget deficit; and loosen lending curbs on some of the weakest banks. As everyone awaits the appointment of the next chief, here’s a look at what could be in store in coming days:

Scheduled for December 14, the RBI’s board is unlikely to meet without a governor at the helm. A great deal is riding on that meeting since government-nominated members on the board had pushed to discuss tighter supervision of the RBI, and to set up committees to have oversight of various central bank’s functions, from foreign exchange management to financial stability. Economic Secretary Subhash Chandra Garg, who is on the board, said last month he wanted to discuss changes to the central bank’s governance structure and seek more interim dividends from the RBI. The central bank had viewed the pressure from government officials as an attack on its independence.

Viral Acharya, the deputy governor in charge of monetary policy, was Patel’s messenger in the public showdown with the government. He gave a hard-hitting speech in late October, warning governments of a market backlash if central bank independence is undermined. Acharya’s opposition to the government’s interference in the RBI’s role has led to speculation that he may be next in line to resign. A professor at New York University, Acharya’s three-year term as deputy governor ends in January 2020.

Prime Minister Narendra Modi will have to appoint an interim governor, as has been the practice in the past, with that post likely to go to NS Vishwanathan, currently the longest-serving of the four deputies at the central bank. An interim appointee could be at the helm for several months before a permanent successor is named. There’s no obvious candidate, but local media are floating names of several people, including Garg, and the top bureaucrat in the financial services division at the Finance Ministry, Rajiv Kumar, both of whom are RBI board members. Shaktikanta Das, a former economic affairs secretary and currently the government’s representative at the Group of 20 summits, is also in the race, according to local reports.

What’s next for India’s central bank after Urjit Patel era ends

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What’s next for India’s central bank after Urjit Patel era ends

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