Reserve Bank of India’s (RBI) Deputy Governor Viral Acharya has quit six months before the scheduled end of his term to return to New York University Stern School of Business (NYU stern) in August as CV Starr Professor of Economics.
"A few weeks ago, Dr Acharya submitted a letter to the RBI informing that due to unavoidable personal circumstances, he is unable to continue his term as a Deputy Governor of the RBI beyond July 23, 2019," the RBI wrote.
"Consequential action arising from his letter is under consideration of the Competent Authority," the central bank added, without elaborating on whether it had accepted Acharya's request to resign.
Acharya told Moneycontrol that he decided to leave six months early due to 'unavoidable personal reasons'. He commented: “For now I am sticking to my school teacher's advice: When your work speaks for itself, do not interrupt.”
Acharya had joined RBI on January 23, 2017. There was speculation that he will follow the former Governor's Urjit Patel footsteps and leave the central bank soon after the latter resigned on December 10, 2018.
In his two-and-a-half-year stint at RBI, Acharya voiced his opinions on critical matters and stood his ground especially when it came to central bank independence.
In his speech at the AD Shroff Memorial Lecture on October 26, 2018, Acharya said that “Governments that do not respect central bank independence will sooner or later incur the wrath of financial markets, ignite economic fire, and come to rue the day they undermined an important regulatory institution.”
In the same speech, Acharya also said that a government’s horizon of decision-making is rendered short, like the duration of a T20 match as there are always upcoming elections of some sort – national, state, mid-term, etc. while in contrast, a central bank plays a Test match, trying to win each session but importantly also survive it so as to have a chance to win the next session.
It should be noted that cleaning up of the banking system has been one of the main focus areas for Acharya since his early days as the deputy governor. He believed that the RBI’s Prompt Corrective Action (PCA) was an effective tool in this exercise.
Currently, Acharya is in charge of the Financial Stability Unit, Monetary Policy Department, Department of Economic and Policy Research, Financial Markets Operation Department, Financial Market Regulation Department, among others at the RBI.
A report stated that another RBI’s Deputy Governor NS Vishwanathan, whose term is due to end in the first week of July is likely to stay back for another two-year term. The process for finding Vishwanathan’s successor has been put on hold.