Viral Acharya Resignation Not Surprising, Won’t Impact Markets, Says SBI
Markets had anticipated Viral Acharya’s resignation after governor Urjit Patel’s exit in December 2018, says SBI Ecowrap report.
Reserve Bank of India deputy governor Viral Acharya's resignation was not surprising and will not roil the markets, the country’s largest lender State Bank of India said in a research report on Monday.
Acharya, who in October last year had brought to light tensions with the government over RBI independence, resigned six months before the end of his term.
Acharya, 45, who was the only RBI deputy governor of on the six-member interest rate-setting monetary policy committee, resigned from his position "a few weeks" back citing "unavoidable personal circumstances", RBI said in a statement.
In his resignation, he expressed inability to continue beyond July 23, 2019, RBI said.
SBI's Ecowrap report said that Acharya's resignation is not surprising.
"Though it was a rumour, but market had anticipated it after the resignation of former Governor Dr Urjit Patel way back in December 2018," it said.
"Quite expectedly" a few voices of concern are being raised here and there about the deputy governor's premature exit, the SBI report said, just like when Raghuram Rajan had resigned as RBI governor.
"On that occasion, a noted journalist, had quipped that 'If Rajan is asked to leave, India will suffer a mass exodus of foreign portfolio investment’. Many economists had said that markets will not respond well to the news," SBI said, adding that the facts are otherwise.
Capital flows nearly doubled in first half of 2017-18 compared to the year-ago period.
Forex reserves also grew, rupee appreciated and stock market also gained in the one year since Rajan's resignation, the SBI Ecowrap said.
"The news of Dr Viral Acharya's exit too, although unfortunate, will not roil markets," said the report authored by Soumya Kanti Ghosh, group chief economic adviser at State Bank of India.
"We believe, institutions are more important than individuals" and ultimately what is important is the credibility and the independence of any institution and nothing else. "Over the years, RBI as an institution has been extremely visionary, pragmatic and fairly independent throughout," the SBI report said.
Patel, who succeed Rajan, had resigned in December 2018, citing personal reasons. Rajan was not offered a second term and left for teaching at Chicago after completing his term in 2016.