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RBI chief Rajan felt undermined in weeks before quitting

Kolkata, 20 June: Reserve Bank of India (RBI) Governor Raghuram Rajan's abrupt decision to quit came as he increasingly felt he lacked support from his political bosses Finance Minister Arun Jaitley and Prime Minister Narendra Modi, according to friends and colleagues.

A newspaper report a week ago that a selection panel would consider a field of candidates rather than directly offer the former IMF chief economist an extension to his three-year term, effectively forcing him to reapply for his own job, may have been the final straw, according to these people and a finance ministry source.

"He felt it would belittle the position of the RBI governor if he had to appear before the committee," said one senior commercial banker who knows Rajan personally but had not spoken to him since his decision."It would reveal a lack of government support. Rather than have two more years of constant quibbling, he decided to go."

The darling of international investors was also upset that Jaitley had not backed him more strongly after criticism from Hindu nationalists of both his policies and his perceived lack of"Indian-ness", the sources said. Rajan joked when he took over the top job at the Reserve Bank of India in September 2013 that he wasn't expecting to win any votes or Facebook 'likes' in the position.

But the hostility he had faced of late from elements of Modi's ruling party was evidently greater than he had counted on, the sources said. When Rajan decided to leave, he did so without warning and on his own terms: in a sign of growing tensions he did not inform top members of the government before releasing an open letter to staff on Saturday, a move that took investors and the government by surprise.

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