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December 3, 2020

Banks had ‘worst phase’ under Manmohan Singh, Raghuram Rajan

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Finance Minister Nirmala Sitharaman has said that the Indian public sector banks had the “worst phase” under the combination of former Prime Minister Manmohan Singh and RBI Governor Raghuram Rajan.

Delivering a lecture at the prestigious Columbia University’s School of International and Public Affairs here on Tuesday, Sitharaman said that giving all the public sector banks a “lifeline” is today her primary duty.

“I’m taking a minute to respond… I do respect Raghuram Rajan as a great scholar who chose to in the central bank in India when the Indian economy was all buoyant,” Sitharaman said during the lecture organized by the Deepak and Neeraj Raj Centre on Indian Economic Policies of the Columbia University.

Nirmala Sitharaman said Banks had ‘the worst phase’ under Manmohan Singh, Raghuram Rajan

Asked about Rajan’s comments during a recent lecture at Brown University in which he apparently mentioned that in its first term, the Narendra Modi government not done better on the economy because the government was extremely centralized.

The leadership not appears to have a consistent, articulated vision on how to achieve economic growth, the minister said instead there major issues with bank loans during Rajan’s tenure as the central bank head.

She said it was in Rajan’s time as Governor of the Reserve Bank “that they gave loans just based on phone calls from crony leaders and public sector banks in India. However, till today are depending on the government’s equity infusion to get out of that mire.

“Dr. Singh was the Prime Minister and I’m sure Dr. Rajan will agree that Dr. Singh would have had a ‘consistent, articulated vision’ for India,” she said amid laughter from the audience.

I’m not making fun of anybody. However, but I want to put this forward for a comment which has come like this. I have no reason to doubt that Rajan feels for every word of what he is saying.

I’m here today, giving him his due respect, but also placing the fact before you that Indian public sector banks. However, it did not have the worst phase than when the combination of Singh and Rajan. Also, as Prime Minister and the Governor of Reserve Bank, had. None of us knew about it,” she said.

Sitharaman said while she is grateful that Rajan did an asset quality review. However, people should know what makes the banks ailing today.


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