Parliamentary Panel Asks Raghuram Rajan For Advice On Tackling NPA Problem
Considering the serious nature of Non-performing Assets (NPAs), a parliamentary committee on estimates headed by senior BJP leader Murli Manohar Joshi has asked former RBI chairman, Raghuram Rajan to appear before it. India Today reported that Murli Manohar Joshi had written to Raghuram Rajan on August 7 to discuss the mounting NPAs.
The committee chairman in his letter has said, “the committee admires his experience and knowledge and if he is unable to testify to the summons in person, the committee would like a written testimony of his expert view on the NPA crisis, how it has been created and how India should tackle it.”
The letter was fired by the chairman of the committee after the last chief economic advisor (CEA) Arvind Subramaniam made a presentation and retired before his term ended. It is said that Subramaniam, last month, credited Rajan for identifying the NPAs issue and asked to launch efforts to resolve the issue.
Subramaniam flagged the role of bank management as the key reason for NPAs being poorly handled. In his deposition, he even hinted at big loans by public sector banks issued under various kinds of influences being the reason, without specifically mentioning any names. He also spoke about the action being taken against NPAs.
The parliamentary panel is looking into NPAs and has sought documents including minutes of board meetings of public sector banks, which gave large loans to borrowers who eventually turned out to be defaulters. The estimates committee expressed serious concern over the NPAs generated by public sector banks.
Total NPAs has touched Rs 8.99 trillion or 10.11 per cent of the total advances at the end of 2017. The gross NPAs of public sector banks were worth Rs 7.77 trillion.
Criticised for the same before
Raghuram Rajan was appointed as the RBI governor by the UPA government and he continued in office till September 2016. He took an aggressive stance towards NPAs and faced resistance from powerful corporate lobbies as he wanted to confiscate personal assets of promoters of companies that emerged as wilful defaulters.
S Gurumurthy, a chartered accountant by profession, an RSS ideologue (although he holds no formal position in the organisation) in an interview with the Economic Times in July 2016, had openly criticised Rajan’s policy towards NPAs. There are speculations that say that RSS was behind the removal of Rajan from the central bank.
Gurumuthy had called Rajan’s NPA-related policies a “sledgehammer approach”. He said the norms were “not appropriate to India and destroyed corporate India’s confidence, shocking them into a shell”.
In the same interview, he also defended ‘home-grown babas-turned-entrepreneurs like Ramdev’ saying that “phenomenon shows the impulse and urge for things Indian”.