This is the second high profile resignation in the past six months at the Reserve Bank of India.
Rajan was expected to join the search committee to appoint three external members of a new six-member RBI Monetary Policy Committee
Raghuram Rajan, who was Chief Economic Advisor in the Finance Ministry before taking over as RBI Governor on September 4, is scheduled to announce the next mid-quarter policy review on December 18.
Speaking at the Delhi Economic Conclave in New Delhi, Reserve Bank of India Governor Raghuram Rajan said the central bank will come out with a discussion paper next week with regard to distressed borrowers and rising non-performing assets.
NPA issues in the banking sector, standoffs in Parliament denting the reform momentum and limited space on the fiscal side are among the major concerns for investors.
The rupee has gained 1.89 percent against the dollar in the month to date and 2.93 percent in the past six months.
'Democracy is India's greatest strength.'
Rajan also said the RBI had reduced the current account deficit "substantially".
Unless Dr Urjit Patel starts clearing the balance sheets of banks, the investment cycle will not start. Unless the clog in the drain is cleared, further lending cannot happen. If further lending doesn't happen, the investment cycle also will not happen, writes M R Venkatesh.
"I think bankers have expressed some concern that they should not be held liable for actions that are taken in the full spirit of what is needed," Raghuram Rajan said.
Sources said Rajan will make the customary call on the Finance Minister on Monday, a day before he presents the policy.
The ratings agency currently rates India at Baa3
Former RBI Governor Subbarao blamed Chidambaram for undermining the autonomy of RBI and putting pressure on him to cut interest rates.
Financial services firm AnandRathi analysed the key points of the policy soon after it was announced.
Rajan had overturned the majority opinion of the members and chose to hold the rates at the last monetary policy review in October.
Prime Minister Narendra Modi defended Mr Rajan, but it would be debated why he took so long to dub criticisms like those against the RBI governor as improper.
'Rajan brought in a healthy air of competition in the banking sector.'
Rajan addressed a group of investors in Boston on Thursday.
'There are lots of low hanging fruits and often no real impediment to plucking them.'
In his address at a conference of state secretaries, Rajan stressed the need to strengthen state-level coordination committees by ensuring participation, conducting meetings more frequently and sharing quality information among all stakeholders, including state government agencies.
Congress leader Rahul Gandhi alleged on Friday that China was preparing for war and the Indian government is sleeping over it and trying to ignore the threat.
Seeking to guard investor returns from excessive exchange rate movements, RBI Governor Raghuram Rajan on Thursday said a move towards an inflation target of 4 per cent will help contain the currency market volatility.
The key short-term lending rate (repo rate)has been hiked by 0.25 pc to 7.50 pc.
Finance Minister Nirmala Sitharaman has rebutted Congress leaders Rahul Gandhi and Randeep Singh Surjewala's allegations regarding "wilful defaulters, bad loans and write-offs", and stated that they have "attempted to mislead people in a brazen manner".
The RBI kept its key policy repo rate unchanged at 8.0 percent in its recent monetary policy.
"I am an economist. He is a lawyer. How can he be better than me," Swamy, whose antagonism for Jaitley is open, said at an event in New Delhi on Saturday.
Over the last two weeks, the RBI has lifted short-term rates to help support the currency
13 eminent economists, including former RBI governor Raghuram Rajan and current International Monetary Fund Chief Economist Gita Gopinath, in a report have asked the political establishment not to resort to populist tricks.
In the global markets, the US dollar traded lower in early trade after former US Treasury Secretary Larry Summers withdrew himself from the race to be the next Federal Reserve chairman.
Advice to the new finance minister from former RBI governor Raghuram Rajan: 1. Clean up banks by reviving projects that can be revived after restructuring debt. 2. Improve governance and management at public sector banks. 3. De-risk banking by encouraging risk transfers to non-banks and the market. 4. Reduce the number and weight of government mandates for public sector banks, and for banks more generally.
Given their stability, the rupee and the renminbi (Chinese currency) -- when made convertible -- could well emerge as substitute currencies which countries will hold their reserves, stated Raghuram Rajan, Economic Advisor to the Prime Minister and Professor of Finance at the Chicago Graduate School of Business, on Wednesday.
Reserve Bank Governor Raghuram Rajan on Friday said banking sector will see major changes in the coming years.
'There has been an enormous amount of attention paid to issues like capital account convertibility, bank privatisation and bank priority sector norms. There are many other areas where reforms are less controversial, but perhaps as important,' the report of the high-level Committee on Financial Sector Reforms headed by Raghuram Rajan, a professor at Graduate School of Business, University of Chicago, said.
India needs foreign exchange buffer reserves to insulate itself from exchange rate volatility as we have "no friends" for swap lines and Japan was the only country that helped during the taper tantrum in 2013, former RBI Governor Raghuram Rajan said on Tuesday. Participating in a virtual event organised by economic think tank NCAER, Rajan said during the taper tantrum in 2013, India asked for swap lines, and only country who helped was Japan. "We need this (foreign exchange) reserve buffer to insulate ourselves because we have no friends.
As deputy governor, Patel headed the RBI panel to draft the monetary policy report, which became the basis of the ongoing reforms at the apex bank
Rajan posed the question while speaking at the annual leadership conference in Mumbai National Association of Software and Services Companies.
Rajan, a professor at the University of Chicago, said if the money raised by the government was not spent, it could result in inflationary pressures, pushing up real interest rates. The problem could get aggravated if foreign capital flows rose, said Rajan, who was in Mumbai to deliver a lecture.
The committee on financial sector reforms headed by Raghuram Rajan has recommended that provident funds and insurance companies should be allowed to invest abroad, a move that will require legislative changes.The panel's draft report has also called for the introduction of "true auctions" in securities, reduction in the auction and trading period, unified disclosure norms for multiple securities, use of call options for opening and closing price on exchanges.
RBI Governor Raghuram Rajan will also participate in the meet.
Announcing her appointment, IMF Managing Director Christine Lagarde hailed the Mysore-born Gopinath as "one of the world's outstanding economists with impeccable academic credentials, a proven track record of intellectual leadership and extensive international experience".
