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  • Category: Miscellaneous

    What do you think of Raghuram Rajan's observations on Non-Performing Assets?

    The Loksabha Committee on Estimates asked the former Governor of the Reserve Bank of India, Mr. Raghuram Rajan, to brief them on the Non-Performing Assets (NPA) of the banks. Mr.Raghuram Rajan blamed the over-enthusiasm of the banks and the policy paralysis on the part of the governments for the increasing NPAs. He further cautioned that the MUDRA loans and Kisan Credit Card under the Prime Minister Mudra Yojana or PMMY may be the potential factors that may add to the present crisis. Loans are given to the unorganized micro and small businesses, called MUDRA loans, and credit extended through the Kisan credit card. According to Mr.Rajan, these loans and also the Credit Guarantee Scheme for Micro, Small & Medium Enterprises (MSME), run by the Small Industries Development Bank of India, are to be examined and closely watched. He also urged all the political parties not to waive farm loans which are detrimental to the credit culture and may result in reduced credit flow.
  • #648163
    I strongly protest against the observation made by Raghuram Rajan that Mudra loans are also reason for increasing NPA in banks. Normally banks are not giving the loans as it is. Like in Janaradhan Poojary of Congress regime the banks were forcefully asked to participate in the loan mela and those who availed loans never paid back. Ultimately the government used to waive the loans. And for Mudra loans not all who availed loans are bad and doubtful debts as many are performing Industries and they are capable of repaying. What the banks gave big loans even with the knowledge of RBI is the matter to ponder over. I think no bank or its manager is authorized to sanction multi crores to business houses without the knowledge of RBI top brass. So if a bank gets cheated, the RBI also has the role and it should also take the blame.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #648167
    He is right. All the parties wishing to come to power promise to waive of the loans to farmers, and when they form the government to rule, they waive off the loans. This creates a heavy loss to banks not increases the NPA. Banks should not be under the control of government. It should be under the Governor of Reserve Bank of India only to take orders and instructions. The parties coming to power make the banks bankrupt by waiving of loans to lure the voters and improve their vote bank.
    No life without Sun

  • #648231
    I agree that the main reason for NPA increase is the unreturned huge loans given to big industrial houses and not getting the loan amounts back. Those amounts are huge. Added to that the loans waivers are another problem in our country. The politicians for their personal benefits making all promises and wasting the money paid by the genuine taxpayers for these free sops. He is right in cautioning the banks to be careful with the new loans that are being sanctioned now. But the question is why such huge amounts are sanctioned and why he didn't try to stop those loans when he was the chief of RBI.
    drrao
    always confident

  • #648232
    The loans are given by the banks but not the RBI. The role of the RBI is a supervisory one. Mr.Rajan made it very clear that the names of the high profile defaulters were intimated to the Prime Minister Office and the Finance Minister. Why the PMO and the FM kept quiet is to be explained by them. His advice is to keep the banking system away from the politicians.
    " Be Good and Do Good "

  • #648238
    I do not know what Mr. Rajan was doing as the governor of RBI during his tenure. His tenure ended few months before the demonetization and after almost two years it came to his mind to reveal things. The issue of NPA is not new and increasing day by day, it is the job of the RBI, as a regulator, to notify the banks about all the bad loans and NPA from time to time and take disciplinary measures against the banks if found flouting rules. I do agree that many rules are flouted because of ministerial pressure and every political party, whoever is in power, is doing the same thing. After these observations let the RBI start an independent investigation to find out the real cause.
    Sankalan

    "Life is easier when you enjoy what you do"

  • #648246
    If RBI is the chief banking agency for our entire banking system, it cannot escape from the argument and allegations that Banks were favoring particular Individuals with big loans and RBI governor wont know this. Yes he might have made a caution to the government , but again exercising his own power as the super controller of banks, he might have applied breaks for huge loans which may not return and he knew and yet kept quiet. What is the use when he says about his action which was half truth. Anyway RBI needs to be totally changed as the staff are favoring those who are close to them during demonetization as we have seen crores of old notes changed during midnight and for this governor cannot say ignorance about that. Modi government must change all the staff and bring new one to monitor the banking policies in transparent way.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #648248
    Mr. Raghuram Rajan was requested by the Estimates Committee chaired by Mr. Murali Manohar Joshi to help them with NPAs. He appeared before the Committee and gave his views in a statement made to them. This is time to think of what he said and what is to be done. It serves no purpose by questioning what he did when he was the Governor of RBI. Everyone knows why he was not given the second term. Before questioning Mr.Rajan, question the PMO and the FM, why no action was taken when the list of high profile fraud cases was given to them by the RBI. This is the time to undo the mistakes and see that the banking system is kept away from self-servicing politicians.
    " Be Good and Do Good "

  • #648271
    In our country, it happens always. The people in the high places use their power and get certain things done. It is not for the first time it is happening. From the day one in our independent India, this practice started. However, RBI can't go away by simply telling that banks are sanctioning the loans. If a lower bank is doing wrong the supervisory organisation should warn them. However, the government should take the points mentioned by the former RBI chief and at least be careful in the future issues and try to solve the existing problems.
    drrao
    always confident


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