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IndiaPosted at: Jun 22 2016 9:07PM


Don't write me off: Rajan tells detractors

New Delhi, Jun 22 (UNI) In a stinging riposte to those writing his ''obituary'', outgoing RBI Governor Raghuram Rajan today said he will be in this job for another two and a half months and he should not be written off as he shall remain around. “In last few days I have read a lot of my obituaries, I am still here for 2.5 months in this job and after that I will still be around somewhere in the world, probably a lot in India, so don’t write me off,” Mr Rajan while inaugurating an ASSOCHAM Industry-Interactive Session in Bengaluru. He also maintained that slow credit off-take was due to stressed balance sheets of public sector banks and not because of high interest rates, essentially dismissing the allegation made by BJP leader and Rajya Sabha member Subramanian Swamy who ran a campaign for his removal. In a surprise development, Mr Rajan on Saturday announced that he would not seek a second term. Mr Rajan had earlier indicated that he might not be averse to a second term as he wished to complete the work initiated by him, including clean-up of bank balance sheets. The public perception is that the RBI Governor has taken the unexpected decision because of the hounding from the BJP leader. Significantly, Mr Rajan’s emphatic rebuttal came on a day when Finance Minister Arun Jaitley snubbed Mr Swamy for suggesting that Chief Economic Advisor Arvind Subramanian be sacked as his loyalty to India was suspect. Mr Jaitley hit back at Mr Swamy, saying the Government has full confidence in the Chief Economic Advisor. Mr Jaitley went a step further and questioned the whole morality of politicians attacking those who cannot respond to attacks against them because of the constraints of discipline placed by the positions they are holding. Coming from Mr Jaitley, the reaction was quite unexpected given that he had not come out to support the RBI Governor when the latter was under attack from Mr Swamy. “The slowdown in credit growth in public sector banks was largely because of stress and not because of high interest rates or lack of capital, Mr Rajan said. “Faced with the dilemma of wanting banks to recognise loan distress and disclose it, not paper over it by ever-greening unviable projects, be realistic about the project’s cash generating capacity, and structuring lending and repaying to match that and wanting them to continue lending to viable projects, even if they had to be restructured in the past and were NPAs, the Reserve Bank had to adopt a pragmatic approach to the clean-up, creating new enabling processes,” Mr Rajan said. The Reserve Bank’s approach to cleaning up the banking system therefore was to introduce several measures, such as, creation of a large loan database (CRILC), coordinating the lenders through a Joint Lenders' Forum (JLF), stopping restructuring of unviable projects by banks which want to avoid recognising losses, introducing the Strategic Debt Restructuring (SDR) scheme so as to enable banks to displace weak promoters by converting debt to equity and formulating the ‘Scheme for Sustainable Structuring of Stressed Assets’ (S4A) as an optional framework for the resolution of large stressed accounts, he added. UNI NM AE 2107
Tags: #Don't write me off: Rajan tells detractors
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