Former RBI chief Urjit Patel says Centre didn’t manage economy well, admits banks were over-lending
New Delhi: Former Reserve Bank of India Governor Urjit Patel admitted last month that Indian banks indulged in over-lending and said that the government did not fully play its role as principal manager of the country’s economic health. In his first public comments after resigning as RBI chief, he said that this has resulted in the current bad loan mess and the resultant low capital buffers.
Patel made these remarks at Stanford University’s ‘Annual Conference on Indian Economic Policy’ on June 3.
In December 2018, Urjit Patel – who had replaced Raghuram Rajan as RBI governor just before demonetisation, but later developed sharp differences with the government over the question of the central bank’s reserves – resigned due to “personal reasons.” Patel was the first central bank governor in decades to resign before his term ended.
Patel said in the presentation that the banks had failed to maintain balanced credit lending growth and that they had applied very little risk analysis and management in sifting good assets from bad. The regulators, he said, failed to react quickly to improve recovery or cut losses.
He blamed the government for not stepping in because “it was receiving significant dividends”.
Patel said the current capital adequacy of public sector banks was “in effect, overstated” if one sees how Indian lenders stand compared to their global counterparts. He pointed out that three big public sector banks – State Bank of India, Canara Bank and Central Bank of India – may require over Rs 250 billion in estimated capital in the 2019-’20 financial year.
“How did we get here? Plenty of blame to go around! Prior to 2014, all stakeholders failed to play their role adequately. Banks, the regulator and government,” Patel said in his first comments after his resignation.
He argued that the provision coverage ratio of Indian banks is lower than that of most other countries, while their net non-performing assets are higher than those of their global counterparts. He said provisions as a percentage of capital jumped from 12% in 2011 to 42% in 2017 – much higher than what is in countries such as South Africa, South Korea, Brazil, and China.
“Temptation to reset ‘back to the past’ should be eschewed,” Patel advised the government, adding that “episodic concerns” on stability are possible if there is “foot dragging, or, worse, back-peddling and the concomitant delays.”
“Short-cuts/sweeping the problem under the carpet is unlikely to work; but will only delay unlocking of capital, and come in the way of financing future investment efficiently,” he warned.
In 2014, the RBI had started an asset quality review, which led to the recognition of the huge pile of hidden stress in the system and resolution through the introduction of bankruptcy laws.
Courtesy: scroll.in
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Steel mirrors deployed in Mysuru to discourage public urination
Mysuru (PTI): Fed up with people relieving themselves along roadsides, the Mysuru City Corporation has adopted a unique strategy to curb the practice and promote civic sense by installing reflective steel mirrors along pavements, officials said on Friday.
In what officials described as a first-of-its-kind initiative, the Corporation installed stainless steel sheets with a mirror finish along an 80-metre stretch opposite the Mysuru Suburban Bus Stand.
Officials said the reflective sheets are intended to confront anyone attempting to urinate in public with their own reflection, thereby discouraging the act psychologically.
“The idea is to maintain cleanliness and hygiene, prevent public nuisance, and promote civic sense. It is a simple yet psychological approach that encourages self-awareness through reflection,” officials added.
Soon after the mirrors were installed, videos of the initiative went viral on social media, with many people appreciating the administration’s innovative attempt to address public urination. At the same time, some users pointed out the lack of basic civic sense among people.
Several social media users also suggested that more public toilets, maintained in a hygienic condition, were needed to further discourage open urination.
Explaining how the idea originated, Nitesh Patil, Administrator and Regional Commissioner of the Mysuru City Corporation, told PTI that despite a public toilet being located next to the bus stand, many people continued to urinate in the open.
Even fines and warnings failed to deter them from relieving themselves against vacant compound walls, leaving behind a foul smell.
“One of our engineers came up with this idea, and we decided to implement it. The initiative has received a very positive response from the public, social media, and the press. We are now planning to identify more such locations in the city and install similar reflectors,” he said.
According to him, to ensure that the installation is both effective and visually appealing, LED lighting that switches on along with the streetlights has also been added, causing the stretch to glow at night and enhancing the city’s appearance.
Patil said the initiative had helped create civic awareness while also beautifying the city.
“We want our city to be clean and hygienic. We aspire to become the cleanest city in the country,” he added, recalling that Mysuru secured third place nationally in the Swachh Survekshan Awards 2024–25 last year.
