CAG Rajiv Mehrishi questions RBI’s accountability over NPA crisis

CAG Rajiv Mehrishi questions RBI’s accountability over NPA crisis

Comptroller and Auditor General of India (CAG) Rajiv Mehrishi on Tuesday questioned the role of RBI in the present banking crisis, asking what the regulator was doing when the banks were lending huge amounts that resulted in asset-liability mismatch and huge bad loans.

The banking sector had non-performing assets (NPAs) or bad loans worth over Rs 9.61 lakh crore by the end of 2017-18, according to government data.

“In the present banking crisis, we all have a narrative about how it can be sorted out, recapitalisation of course, which is a very strange word to be used for the subsidies, but nobody is asking the real question that what actually the regulator (Reserve Bank) was doing. What is its role, what is its responsibility?,” he asked while speaking at the launch of Indian School of Public Policy (ISSP) here.

The major cause of current banking crisis is huge asset liability mismatch; but nobody is talking about this, there is a lack of public policy debate, Mehrishi said. He said India lacks a flourished bond markets in absence of which the banks are forced to lend to long-gestation infrastructure projects. Read More

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