Raghuram Rajan appeals to public banks to clean-up bad debt

RBI Governor Raghuram Rajan on Wednesday appealed to banks to clean up their bad debt. Rajan called it an essential step to achieve stronger economic growth.

“I am here to talk on resolution of financial distress. I’m talking about obituaries rather than birth announcements,” said Rajan “It feels like in the last few days I’ve read a lot of my obituaries and I’m still here for two-and-half months in this job.”

He said PSU banks are unwilling to lend more due to bad loans. Rajan urged state-run banks and company promoters to not keep the issue lying around. “To the question of what comes first, clean up or growth, I think the answer is unambiguously “Clean up!” Rajan said.

In this speech, Rajan claimed his actions like ordering state-run banks to conduct comprehensive asset quality reviews of their balance sheets actually helped the economy.

He also said he still has two and a half months to go before he steps down, and one shouldn’t ‘write him off’.

Image credit: Indiatimes