Go Ahead”: What Arun Jaitley Told Raghuram Rajan About Tackling Bad Loans

New Delhi: 

Corruption and delayed planning permits, or land and environmental clearances, contributed to the build-up of non-performing assets – post the global financial crisis – on Indian banks’ books, former Reserve Bank chief Raghuram Rajan said Wednesday in an interview with an online portal.

Mr Rajan, the RBI Governor from 2013 to 2016, said an AQR, or asset quality review, started in 2015 led to bad loans “tumbling out”, and prompted a talk with the late Arun Jaitley, then the Finance Minister; Mr Rajan told The Print Mr Jaitley gave him the greenlight to “clean up” the system.

“He said, ‘fine, go ahead’. We did it… but it required the government to put capital in there (and) I think we were not fast enough to put back the capital needed to resume lending…” he said.

“The issue was that post the global financial crisis many projects started in the euphoria before the crisis were in trouble. And, of course, we had problems in India over and above the global financial crisis, which was corruption scandals and, therefore, delayed permissions for projects…”