Reasons of Resignation of Dr Urjit Patel from the post of Governor of RBI. What are the causes and impact on economy?

1. RBI GOVERNOR'S EXIT
AND MORE....
-Vinit Varma

2. Urjit Patel
Urjit Ravindra Patel (24th Governor)
 28 October 1963 (age 55) Nairobi, Kenya
 Nationality Kenyan (till 2013), Indian (since 2013)
 Alma mater: London School of Economics (BA)
 University of Oxford (M.Phill)
Yale University (Ph.D)
 Advisory panels, Govt Consultant, Deputy
Governor
-Vinit Varma 11th December, 2018

3. Resignation letter
 “On account of personal reasons, I have decided to
step down from my current position effective
immediately. 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.”
-Vinit Varma 11th December, 2018

4. -Vinit Varma 11th December, 2018

5. Probable Impact
Immediate remedial steps are needed
- To understand a cause for resignation is
important
- Impact (Measurable later on)
- FDI
- Rupee (1.5% weaken)
- Market Adversely affect
- Share market will gradually lose confidence
- Banking System feel uncertainty
-Vinit Varma 11th December, 2018

6. Insight issues
 CG demands Surplus Rs 3.6 lakhs cores from
RBI
 Diluting PCA Framework
 11 Banks
 Restricted lending situation
 Dividend
 2015-16- Rs 65,876 Cr
 2017-18- Rs 30,659 Cr
 CG indirectly blamed on supervisory ability of
RBI
-Vinit Varma 11th December, 2018

7. Insight issues
The finance ministry sent three different letters
to the RBI in the past few weeks on issues of:
 Prompt Corrective Action (PCA) for public
sector banks
 The governor's opinion on RBI's capital
reserves for providing liquidity
 Withdrawal of PCA for Public Sector Banks
(PSB)
-Vinit Varma 11th December, 2018

8. Whole issue of controlling
 On 26th Oct Viral Acharya (Dept Governor) said that
attempts to demoralize RBI’s autonomy would be
“potentially catastrophic”, a “selfgoal” of sorts, as it can
trigger a crisis of confidence in capital markets”.
-Vinit Varma 11th December, 2018

9. Whole issue of controlling
 The RBI Act 1934, Section 7 of the constitution
reads, "The central government may from time-to-
time give such directions to the bank as it may,
after consultation with the governor of the bank,
consider necessary in the public interest".
-Vinit Varma 11th December, 2018

10. 3.6 lakh Crore
 Total assets of RBI – Rs 36,17,594 Crore
-Vinit Varma 11th December, 2018

11. 3.6 lakh Crore
 Total Assets of RBI – Rs 36,17,594 Crore FY 18
 Total Reserve Rs 9,70,000 Crore Approx
 28% approx
 According to Usha Thorat Committee(2004):
Reserve should be apporx 18%
 Y.H. Malegam Committee recommends almost
the same
 Wold wide reserve ranges 13 to 17%
-Vinit Varma 11th December, 2018

12. -Vinit Varma 11th December, 2018

13. 3.6 lakh Crore
 RBI reluctant to give its reserve to CG
 CGRA issues
 NPAs
 Trade war
 Uncertainty in international economy
-Vinit Varma 11th December, 2018

14. Pressure
Bye
Bye
RBI
-Vinit Varma 11th December, 2018