Urjit Patel quit over RBI payout to Centre, says Top Panel member

Mangalore Today News Network

New Delhi, Aug 29, 2019 : Former Reserve Bank of India (RBI) Governor Urjit Patel quit last December after differences over transferring its reserves to the Union government, a member of a panel set up to study the central bank’s capital framework has told NDTV.

 

This statement from Rakesh Mohan, who is part of the panel led by former Governor Bimal Jalan, is possibly the first official confirmation of how the disagreements that arose from the government pushing the RBI to part with a greater share of its surplus may have influenced Urjit Patel’s decision to resign.

Mr Mohan, who has also served as the RBI’s Deputy Governor in the past, was speaking to NDTV about the central bank’s approval for a record payout of Rs. 1.76 lakh crore to the centre.

"You might recall that the whole issue had risen from the Economic Survey 2015-16, in which the Chief Economic Advisor opined that the RBI has excess reserves. The numbers were something from three lakh to nine lakh crores. This was the context in which the committee was appointed, and also among the issues in which Dr Urjit Patel resigned as the Governor," he said.

Urjit Patel had cited "personal reasons" for his decision to quit last year.

It was based on the Jalan committee’s recommendations that the RBI approved a record payout of Rs. 1.76 lakh crore to the government. This includes Rs. 1.23 lakh crore of the entire net income of the central bank for the year and Rs. 52,640 crore from the bank’s contingency fund (a part of the RBI’s reserves).
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The payout, which comes at a time when there are signs of severe stress in several sectors, has been extensively criticised by opposition parties. "The Prime Minister and Finance Minister are clueless about how to solve their self-created economic disaster. Stealing from the RBI won’t work -- it’s like stealing a Band-Aid from the dispensary and sticking it on a gunshot wound," Congress chief Rahul Gandhi had tweeted yesterday.