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What was RBI doing when NPA crisis was brewing? CAG

Controller and Auditor General Rajiv Mehrishi raised questions over the role of the Reserve Bank of India (RBI) at the time the NPA crisis was brewing in the banking sector

New Delhi: Controller and Auditor General (CAG) Rajiv Mehrishi raised questions over the role of the Reserve Bank of India (RBI) at the time the NPA crisis was brewing in the banking sector. He noted that in the narrative around the crisis caused by rising non-performing assets (NPA), one of the most important questions that has not been asked is what the central bank was doing.

According to the government, the banking sectors had non-performing assets (NPAs) or bad loans worth over Rs 9.61 lakh crore by the end of 2017-2018.

‘What was the RBI’s responsibility?’

While noting that relevant questions had not been asked, Mehrishi said, “In the present banking crisis, we all have a narrative about how it can be sorted out, but nobody is asking the real question… that what actually the regulator (RBI) was doing. What is its role, what is its responsibility?” “If the banks were going berserk with their lending, then what was the regulator doing,” the CAG asked. “And if it is accountable for this crisis or not, that is also a narrative nobody is talking about,” he added. Lack of debate on any public policy was at the heart of the bank’s mounting non-performing assets problem, Mehrishi said.