Resignation not surprising at all

Mumbai: The resignation of Reserve Bank deputy governor Viral Acharya six month before the end of his tenure is not surprising and is unlikely to roil the markets, believe market participants.

Acharya, who took over as the youngest deputy governor on January 20, 2017 had a three-year tenure but resigned a few weeks ago due to "unavoidable personal circumstances."

"The early exit of Acharya is not surprising. The market anticipated it the minutes after the resignation of past governor Urjit Patel in December 2018," home economists at SBI Research said.

"But the news, although unfortunate, is unlikely to roil the markets," they said. According to Japanese brokerage Nomura, Acharya's departure is not a complete surprise, as frictions between him and the government on issues related to central banks' independence had come to the fore, including in his October 26, 2018 speech entitled-- 'The importance of the independent regulatory institutions - The case of the central bank'.

"At the margin, the composition of the monetary policy committee will likely become incrementally more dovish, in our view, as Acharya stood on the more hawkish side of the policy spectrum," Nomura said in a report.

The SBI economists further said a few voices of concern are being raised here and there about Acharya's pre- mature exit, just like it was done when the then governor Raghuram Rajan had announced his departure.

It said institutions are more important than individuals and ultimately what is important is the credibility and the independence of any institution and nothing else.

An analysis of RBI's history, in respect of managing price stability since 1983, points out that almost all the governors have given prime importance to price stability, with the number of positive surprises in inflation numbers were also significantly high in earlier decades compared to current scenario, the SBI report said.