The Comptroller and Auditor General of India (CAG), Rajiv Mehrishi, on Tuesday questioned the role of the RBI in the current banking crisis. The banking sector had non-performing assets or bad debts worth more than Rs.9.61 million at the end of 2017-2018, according to government data.
"In the current banking crisis, we all have an idea of how this can be solved, a recapitalization of course, which is a very strange word to use for grants, but no one is asking the real question of what the regulator (Reserve Bank) was doing. What is his role, what is his responsibility? He asked at the launch of the Indian School of Public Policy (ISSP) here.
The main cause of the current banking crisis is the huge asset-liability imbalance; but nobody talks about it, there is no debate on public policies, Mehrishi said. He added that India lacked flourishing bond markets, otherwise banks would be forced to lend to long-term infrastructure projects. And when these projects face difficulties, their difficulties are reflected in those of the banks, he said. The GAC also highlighted the lack of public policy debate or narrative of the root causes of the banking crisis; and also, no one speaks or writes about the regulator's role.
Despite the mismanagement of banks and the theft of public money that is one of the reasons for the disorder of the banking sector, there is much more to do, which is complex to understand, he added. "If the banks went crazy with their loans, what was the regulator doing? And if he (the RBI regulator) is responsible for this crisis or not, it's also a story that nobody talks about, "he said. Among the NPAs of the banking sector of more than R $ 9.61 the bank as of March 31, 2018, 85,344 crores came from agriculture and related activities, while the bulk of Rs. 7.03 crores came from loans. to the industrial sector.
Speaking about economic reforms and relations between central states when promulgating changes, the chairman of the 14th Finance Committee and former finance secretary, NK Singh, said the center could not only lead to economic restructuring. "Economic reforms can not be simply taken by the central government. For example, labor reforms and land reforms have left state governments to define what they want to adopt and to believe in the changes needed for economic reforms, "said Singh.
He also spoke of the pedagogy built around relations between the central state and the unfinished agenda of India's major economic reforms, and said that simple tinkering would not be enough and that deep structural reforms were needed. He said that India badly needed structural reforms and that many of them were related to what state governments could do in that direction.
The Indian School of Public Policy will begin its first round of full-year public policy, design and management programs for professionals with 2-3 years of relevant experience beginning in 2019. The school intends to train a new class of policy makers for India by equipping professionals with knowledge, skills, wisdom and ethics policies to understand, design and implement local solutions to India's persistent policy and governance challenges, said the IPPH.