Putting speculation to rest, RBI Governor Urjit Patel has stepped down citing ‘personal reasons'. In a note, Patel said, “On account of personal reasons, I have decided to step down from my current position effective immediately. It has been my privilege and honour to serve in the Reserve Bank of India in various capacities over the years. The support and hard work of RBI staff, officers and management has been the proximate driver of the Bank's considerable accomplishments in recent years. I take this opportunity to express gratitude to my colleagues and Directors of the RBI Central Board, and wish them all the best for the future. Urjit R. Patel 10th December 2018.

Reacting to the news, the Congress party said it was the result of ‘chowkidar's' assault on democratic institutions. In a tweet on its official twitter handle the Congress said, “Another one bites the dust. This is the result of our ‘chowkidar's' assault on democratic institutions – RBI Governor, Urjit Patel steps down”.

On the other hand, Former RBI governor Raghuram Rajan said that he has made a statement that the autonomy of the central bank should not be undermined. “Believe resignation of RBI Governor Urjit Patel is a matter of great concern. Resignation by a government servant is a note of protest when faced with circumstances they cannot deal with,” Rajan told ET Now.

Patel and the Prime Minister Narendra Modi government were not on the same page on various issues including sharing of RBI surplus reserve and demonetisation. Earlier, Moneylife had reported that the governor could have resigned at the central bank's board meeting on November 19.

According to reports, the rift between RBI and Modi government worsened late last month when deputy governor Viral Acharya said in a speech that undermining central bank independence could be “potentially catastrophic”.

Recently, Former Chief Economic Adviser Arvind Subramanian told NDTV that the independence of the Reserve Bank of India was vital, and any attempts by the government to coerce the central bank into parting with its cash would amount to a “raid”. “It (surplus funds) should not go towards routine financing of spending and deficit financing – that would amount to raiding the RBI.”