Most NPAs originated in 2006-08, banks to blame: Raghuram Rajan
New Delhi, Sep 11 : Former RBI Governor Raghuram Rajan has said that a big number of non-performing assetes (NPAs) originated in 2006-08 when India's economic growth was strong while some banks proved inadequate in making proper due diligence.
Rajan was replying to a Parliamentary panel on NPA,
Acknowledging corruption as a factor, he also said that though he had forwarded some names for filing cases against some "high profile" bank fraudsters to Prime Minister Narendra Modi, no action had been taken in the matter.
"A larger number of bad loans originated in 2006-08 when economic growth was strong, and previous infrastructure projects such as power plants had been completed on time and within budget.
"It is at such times that banks make mistakes. They extrapolate past growth and performance to the future. So, they are willing to accept higher leverage in projects, and less promoter equity," he said.
In his note to Parliament's Estimates Committee on public sector banks headed by BJP leader Murli Manohar Joshi, Rajan said that global slowdown, project cost overruns and government decision-making were among other factors that contributed to the process.
Gross NPAs accumulated in the Indian banking system has touched a staggering level of Rs 10 lakh crore.
Referring to malfeasance as a factor in the NPA issue, Rajan said: "Undoubtedly, there was some... clearly, bankers were overconfident and probably did too little due diligence for some of these loans.
"Unfortunately, the system has been singularly ineffective in bringing even a single high-profile fraudster to book. As a result, fraud is not discouraged.
"I sent a list of four high-profile cases to the PMO for coordinated action to bring at least one or two offenders to book. I am not aware of the progress. This is a matter that should be addressed with urgency," he added.
According to Rajan, the RBI had set up a fraud monitoring cell during his Governorship to coordinate early reporting of such cases to the investigative agencies.
The former Governor also blamed public sector banks for inadequate due diligence before and after handing out loans. "Banker performance after the initial loans were made... (were) also not up to the mark," Rajan said.
"Unscrupulous promoters who inflated the cost of capital equipment through over-invoicing were rarely checked," he noted. He said the RBI could have been more pr-oactive and "raised more flags about the quality of lending in the early days of banking exuberance".
Rajan also said the phenomenon of loan waivers vitiate the credit culture and an all-party agreement to this effect would be in the country's interest in view of impending elections.
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'Shocked' SC summons police commissioner, IO on Apr 13 in Ghaziabad rape-murder case of minor
New Delhi (PTI): Expressing deep shock, the Supreme Court on Friday intervened in the harrowing rape-murder case of a four-year-old girl in Ghaziabad and summoned the police commissioner and the investigating officer on April 13 with the case records.
A bench comprising Chief Justice of India (CJI) Surya Kant and Justices Joymalya Bagchi and Vipul M Pancholi took note of the submissions of senior lawyer N Hariharan, appearing for the victim's father, a daily wager, and expressed its displeasure over the manner in which the state police had conducted the investigation so far in the case.
The CJI lambasted the state police and two private hospitals, which refused to treat the girl before she succumbed to her injuries post-alleged rape, for their "complete indifference" and "insensitive approach".
On March 16, the victim was allegedly lured away by a neighbour on the pretext of buying chocolates and when the child did not return, a search led the father to find her lying unconscious and covered in blood. She later succumbed to her injuries at a government hospital in Ghaziabad.
