Former RBI Governor Raghuram Rajan has been requested by the Lok Sabha Committee on Estimates to appear before it over the prevailing NPA (Non-Performing Assets) problem that is being faced by Indian banks.
As per sources, a letter has been issued to Rajan, who was at the head of the Reserve Bank of India till September 2016 having been appointed to the post during the final year of the Manmohan Singh-led UPA government. The committee, which is headed by senior BJP parliamentarian Murli Manohar Joshi, has sought Raghuram Rajan's appearance in person, or, because he is currently based abroad, his response via mail.
As per the Lok Sabha's website, the Committee on Estimates is a Parliamentary committee comprising 30 members that are selected each year from members of the lower house, with the committee's chairperson being appointed by the Speaker. The committee's function is to:
The Committee on Estimates is looking to discuss the NPA problem, which has seen bad loans on the books of Indian banks mounting to unprecedented levels, impacting their capability to infuse credit into the system, among many other problems. The RBI, which is the nation's central bank and is in charge of determining the monetary policy, has taken a number of measures over the last few years to pave the way for these NPAs to be resolved, with some of the biggest defaulters being targeted first. Measures began during Rajan's time and continued under his successor Urjit Patel, the current RBI Governor.
Patel has also appeared before a parliamentary panel over NPAs, recent bank scams, and other issues, and more recently, outgoing Chief Economic Advisor (CEA) Arvind Subramanian who had succeeded Rajan in the post when the latter became RBI Governor, appeared before it. Subramanian is said to have credited Rajan for identifying the NPA problem, which, as of December 2017, has risen to Rs 9 lakh crore or just over 10% of total advances. Of this, over 85% of the NPAs are on the balance sheets of public sector banks (PSBs). Subramanian also claimed that lending in these cases, especially by PSBs, may have been influenced politically.
Rajan is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth School of Business. He is credited with predicting the 2008-09 US Subprime loans-linked recession, but has also been questioned over a change made to the 20-80 Gold Scheme by the retreating UPA government in its very last days that was ratified by the RBI and allegedly facilitated activities of the PNB Bank scam-accused Nirav Modi and Mehul Choksi.
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