Tensions between the RBI and the Centre have spilled into the public domain after Viral Acharya said last week that undermining central bank independence could be ‘potentially catastrophic’. Governor of Reserve Bank of India Urjit Patel may resign from his post due to the breakdown in relations with the government, sparking a sell-off in the rupee and bonds.
Several television news channels cited sources as saying that Patel could quit. Although the RBI and the finance ministry has declined to comment. The government has invoked never-before-used powers under the RBI Act that allow it to issue directions to the central bank governor on matters of public interest.
