Raghuram Rajan blames UPA policies for NPA problem |
Raghuram Rajan, former governor of RBI has blamed corrupt bank management and UPA era policies for Non Performing Assets (NPAs) problem. Lok Sabha Committee on Estimates headed by Murli Manohar Joshi had asked for a response from Rajan over the NPA problem. Raghuram Rajan replied to various questions like why NPAs occurred, why did the RBI set up various schemes to restructure debt and how effective were they, did the RBI create the NPAs, why did the RBI initiate the Asset Quality Review, did NPA recognition slowed credit growth, and hence economic growth, why do NPAs continue mounting even after the AQR is over, what could the regulator have done better, and how should we prevent recurrence in his 17-pages long note. The UPA government told the management of public sector banks to go on heavy lending. Some loans were given to genuine borrowers but most of the loans have gone to people well connected in political circles and to management of the public sector banks. “One promoter told me about how he was pursued then by banks waving cheque books, asking him to name the amount he wanted,” wrote Rajan in his response. “Too many loans were made [given] to well-connected promoters who have a history of defaulting on their loans” added Rajan. During the global financial crisis of 2007-08, UPA government ran huge fiscal deficit to finance economic growth.
|
|
|
|