The resignation of Palaniappan Chidambaram, one of the architects of economic liberalisation, was accepted by President Ramaswamy Venkataraman on Thursday night. Mr Chidambaram appeared in parliament yesterday but made no statement and refused to speak to the press.
On Thursday he had made public a letter to the Prime Minister, P V Narasimha Rao, in which he confessed to having invested money in a company being investigated in the pounds 700m scandal. He said his wife Nalini, who managed the family's financial affairs, had invested 250,000 rupees ( pounds 4,600) of their money in Fairgrowth Financial Services, named by the central bank as involved in the securities transaction scandal.
'It is my sincere hope that these small investments will not cause any embarrassment to the government,' Mr Chidambaram said in the letter. 'If they do, I would have no hesitation in stepping down.'
Almost 32 billion rupees of transactions between banks and financial institutions was not backed by securities or was backed by fraudulent securities, the government has said.