New Delhi, Sep 10: In what is being seen as an endorsement of the Modi government's stance and also an embarrassment of the Congress-led UPA regime, former RBI Governor Raghuram Rajan has blamed “policy paralysis” under Manmohan Singh for mounting non-performing assets (NPAs).
According to BJP sources, the former RBI Governor Mr Rajan, who was originally appointed to the post by the erstwhile UPA regime also said the bankers were more than 'optimistic' and gave away loans that led to NPAs worth about Rs 7.77 trillion.
Sources said Mr Rajan made his submission before the Lok Sabha's Estimates Committee - which is headed by senior BJP leader Dr Murli Manohor Joshi.
Mr Rajan opted to quit in September 2016 - incidentally just two months before Prime Minister Narendra Modi imposed the demonetisation move.
BJP sources said the Estimates Committee which has among others members such as Kalyan Banerjee (Trinamool), KH Muniyappa (Congress), Ramen Deka and Sanjay Jaiswal (both BJP) and Jayprakash Narayan Yadav (RJD) is also examining various papers and documents from the finance ministry as well as minutes of the board meetings of the public sector banks.
The panel members have expressed anxiety the manner big-ticket loans were approved.
Mr Rajan's remarks come days after NITI Aayog vice chairman Rajiv Kumar has said that under the previous Governor, Raghuram Rajan, who 'revised the mechanisms', the NPAs began to grow which is why the banking sector stopped giving credit to the industry.
Interestingly, Mr Rajan also said that under UPA regime the decision making process had suffered and slowed down after the alleged coal scam had surfaced in Indian polity.