The Indian Government intends to keep pressing demands for the country's Central Bank to relax lending curbs and hand over surplus reserves even if it risks provoking a resignation by the Bank's Governor, three sources familiar with the Government's thinking told Reuters.
While there appeared to be a partial truce last week when the Government said it respected the autonomy of the Reserve Bank of India (RBI), the sources said the Government will turn up the heat at the Bank's Central Board of Directors meeting on 19 November.
And RBI Governor Urjit Patel will be a key focus of the pressure from a group of directors who support the Government's position, according to the New Delhi-based sources, who declined to be named due to the sensitivity of the matter.
"We want the RBI Governor to accept the priorities of the economy and to discuss these with board members," said one of the sources, a senior Government official with direct knowledge of deliberations. "If he wants to take decisions unilaterally, it will be better for him to quit."
Investors and traders warn that if Patel quits it will create uncertainty and undermine India's already-weak financial markets. They have been hurt in recent weeks because of defaults by a major financing company.
A Finance Ministry spokesman declined to comment for this story.
The online financial publication ‘Moneylife’ reported today (07), that Patel could resign at the Central Bank's next board meeting on 19 November, citing sources in touch with the Governor.
Moneylife said that Patel was tired of the struggle with the Government, and it was having a negative impact on his health.
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