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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Heavy rain, hailstorms likely to lash Uttarakhand on Tuesday; IMD issues warning
Dehradun/Pithoragarh (PTI): The India Meteorological Department (IMD) has issued a warning for heavy rain and hailstorms across several districts of Uttarakhand on Tuesday, as temperatures remained markedly below normal in the region.
Heavy rainfall is likely at isolated places in Dehradun, Haridwar, Tehri, Pauri, Nainital, Champawat, and Udham Singh Nagar districts. Most places across all districts are expected to receive light to moderate rain or thunderstorms, while higher reaches are likely to witness snowfall, officials said on Monday.
The weather department warned of thunderstorms accompanied by lightning, hail and intense spells of rain in six districts, including Dehradun and Nainital. Gusty winds with speeds reaching 40-50 kmph are also expected at isolated locations in these areas and other hilly districts.
In the state capital, Dehradun, the sky is forecast to remain partly cloudy with light rain and thunderstorms accompanied by gusty winds of 30-40 kmph.
The maximum and minimum temperatures in the city are expected to hover around 31 degrees Celsius and 19 degrees Celsius, respectively.
Maximum temperatures during the past 24 hours remained markedly below normal in the hills and appreciably below normal in the plains. While no significant change in temperature is expected over the next 2-3 days, the IMD predicts a rise of 3-5 degrees Celsius during the subsequent 3-4 days.
Rainfall was recorded in several areas after 8.30 am today, with Ramnagar receiving 31.5 mm and Nainital recording 26.5 mm. Other areas, including Pithoragarh, Khatima and Champawat, also reported moderate precipitation.
Authorities have stopped a batch of 36 Adi Kailash pilgrims at the Dharchula base camp and placed the high-altitude yatra route on high alert following heavy rains and hailstorms in the district on Monday.
Dharchula SDM Ashish Joshi said the pilgrimage was halted due to adverse weather conditions. The issuance of new inner-line passes has been suspended until the weather normalises.
With 1,700 passes issued so far, pilgrims already at higher camps are being monitored for safety, the official added.
