Who Is Responsible for the Bad Loans (Non-Performing Assets) Problem?
A mud-slinging exercise is going on between the former Congress and present BJP government about who is responsible for the mounting non-performing assets (bad loans) problem. Political parties, as usual, are blaming each other for this mess. Former RBI governor Dr. Raghuram Rajan implicated bankers themselves for this problem. In a note on bank non-performing assets (NPAs) prepared at the request of Murli Manohar Joshi, Chairman of the Parliament Estimates Committee, Dr. Rajan said The truth is bankers, promoters, and circumstances create the bad loan problem…The RBI is primarily a referee, not a player in the process of commercial lending . He also said, the government should refrain from setting ambitious credit targets or from waiving loans . He also warned that the next crisis in India’s banking sector could come from loans given to the unorganised micro and small businesses, called MUDRA loans, and credit extended through the Kisan credit card. How much ...