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Need to keep morality aside to deal with NPAs: Rajan

Sentinel Digital DeskBy : Sentinel Digital Desk

  |  20 April 2016 12:00 AM GMT

New York, April 19: RBI Governor Raghuram Rajan has said the morality needs to be kept aside while dealing with the recovery of non-performing assets (NPAs) of banks.

He was referring to the recent stringent action against beleaguered liquor baron Vijay Mallya in the loan fraud case.

“What’s happening on the NPA front...this becomes loaded with a lot of morality, are these good people, bad people. I think one should take out the morality from the NPA clean-up,” Rajan said during the Iugural Kotak Family Distinguished Lecture at Columbia Law School here on Monday.

Referring to the “big mes and big companies” being involved in loan default cases, Rajan said, “We do want to have our banks get their money back. For that we need a proper bankruptcy system, a court system that functions in finite time and we didn’t have that in the past.”

Mallya currently has a non-bailable warrant issued against him along with his passport being revoked for non-payment of Rs.9,000 crore IDBI loan.

Rajan said that there could be multiple reasons why loans become non-performing but “we very much want these assets to be back on track”.

“It may have become non-performing simply because you had terrible luck or somebody else’s fault. Somebody cancelled your licences, didn’t give you approvals on time, your partner didn’t perform. There could be all sorts of reasons why companies get into trouble,” he said.

“It is a completely separate issue of who to blame and whether there is crimil liability involved. In some fraction of the cases there may be crimil liability involved. That should be separated from the whole issue of putting the assets back on track,” he added. (IANS)

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