Reserve Bank of India Governor Raghuram Rajan will return to academia when his current term ends on September 4, he said in a message to the bank staff on Saturday.
While there had been much speculation over his second term, Rajan, in the letter, told his colleagues that he was always an academic and that his "ultimate home is in the realm of ideas". He said he would be returning to the University of Chicago, where he is a distinguished service professor of finance at the Booth School. He had taken leave from the university to become the RBI chief.
In the letter, Rajan refers to his first speech on taking charge, and looks back with satisfaction that they had accomplished what they had set out to do.
“...Two subsequent developments are yet to be completed. Inflation is in the target zone, but the monetary policy committee that will set policy has yet to be formed. Moreover, the bank clean up initiated under the Asset Quality Review, having already brought more credibility to bank balance sheets, is still ongoing. International developments also pose some risks in the short term,” he said in the letter that has been uploaded on the RBI website.
His letter makes it clear he has discussed his decision with the Union government.
While BJP MP Subramaniam Swamy had sought Rajan's removal, the markets were said to be apprehensive about the outcome of his exit—it is the first time that the person in the chair of RBI governor appears to have mattered to the markets.