Analysts and peddle watchers said the recent dispute between the RBI and the government could have been a major factor in Patel’s conclusion to resign.
“Quite clearly the resignation of Urjit Patel shows that nothing has changed,” Yashwant Sinha, a erstwhile finance minister and member of the ruling Bharatiya Janata Party, told CNBC-TV18.
“The resignation is a clear sign of the command trying to interfere with the working of the RBI,” he added.
Prime Minister Narendra Modi’s government has been putting constrain on the RBI to ease its regulatory curbs on some banks, infuse more liquidity and relax capital norms as it faces a slowing concision ahead of general elections due by May.
RBI Deputy Governor Viral Acharya said in a speech in October that undermining a chief bank’s autonomy could be “catastrophic”, prompting a public dispute that added to the rift between the bank and domination.
The Modi government has stacked the RBI’s 18-member board with its own nominees, in what critics say is a move to exert greater handle over the central bank’s regulatory powers.
Patel’s sudden resignation is expected to roil financial markets on Tuesday.
Investors resolution be keen to know who is Patel’s replacement and the direction of the central bank’s financial and monetary policy, analysts said.
“Sells certainly will be concerned unless there is further clarification that come through tonight,” said R. Sivakumar, turning point of fixed income at Axis Mutual Fund.
“I think tomorrow and over the next few days we can expect heightened volatility in the stock exchanges,” he added.