Mumbai: Rating agency Fitch on Wednesday said Urjit Patel’s resignation highlighted risks to policy priorities. The government has unsuccessfully pushed the Reserve Bank of India (RBI) to relax prompt corrective action (PCA) thresholds to allow some troubled banks to step up lending.

Increased government influence on the central bank could undermine the progress of the RBI’s efforts to address bad loan problems, it added.

Urjit Patel resigned on Monday, citing “personal reasons" for his decision to immediately step down. His resignation came four days before an RBI board meeting, and at a sensitive time for the government.

Also read: Opinion | What the Urjit Patel resignation episode tells us

While not commenting directly on Patel’s exit, Moody’s Investors Service said on Monday any signs the government was attempting to curtail the RBI’s independence would be a credit negative. “We currently assume that the RBI will continue to pursue price and financial stability and implement policies towards these goals," the agency said in an emailed statement.

Last week, Fitch said it expects the rupee to weaken to 75 against the US dollar by the end of next year due to a widening current account deficit and tighter global financing conditions.

Also read: Opinion: Why Urjit Patel will not be missed as RBI governor

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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