Former Reserve Bank of India Governor Raghuram Rajan has reacted to the shock resignation of RBI Governor Urjit Patel calling it a "note of protest" by a government servant. Patel's three-year-tenure was supposed to end in September 2019.
But speculation has been mounting for weeks that Mr Patel could resign over government actions.
"On account of personal reasons, I have made a decision to step down from my current position effective immediately", Patel said in a statement.
"Support & hard work of RBI staff, officers & management has been proximate driver of Bank's considerable accomplishments in recent years".
Over the past few months several contentious issues have cropped up between the RBI and the government.
PM Modi described Urjit Patel as "an economist of a very high caliber" and credited him for steering the banking system from "chaos to order".More news: Ex-Nissan boss formally charged for financial misconduct
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Ms Banerjee accused the BJP of "behaving like a dictator" and alleged "financial stability is not there. financial emergency has started". Who replaces Dr Patel would be paramount, especially at a time when there is forex volatility, NPA worries and liquidity concerns.
"According to me Patel should have resigned on 19 November [date of RBI meeting] when the government had humiliated him".
Part-time director of the RBI, S Gurumurthy, said he was surprised at the news that RBI governor has resigned. "I wish Dr. Patel all the very best and many more years of public service", Jaitley tweeted. He previously served as the RBI's deputy governor. While some speculated it was owing to a breach of autonomy and the confusion over invoking of Section 7 of the RBI Act, 1934; Others said it could be owing to the stress and health.
Modi described Patel as a "thorough professional with impeccable integrity". Acharya had explicitly said he had the backing of Governor Patel for making the speech. "We will miss him immensely".
The Finance Ministry till filing of this report could not be reached for comments on this development.But experts are saying that this move of the RBI Governor could affect the overall health of the economy and will also hurt India's image of a growing economic giant. He also said things would be clear only after the RBI board meeting on December 14. "That makes it even more surprising".