New Delhi: A parliamentary committee looking into the issue of mounting non-performing assets (NPAs) has asked former Reserve Bank of India (RBI) governor Raghuram Rajan to appear before it and brief on the matter. Rajan was invited after former chief economic adviser Arvind Subramanian praised him before the parliament’s committee on estimates, headed by veteran BJP leader Murali Manohar Joshi, for identifying the NPA crisis and trying to resolve it.
Joshi has written a letter to Rajan asking to appear before the panel and brief the members on the issue of mounting NPAs, a person familiar with the matter said. The letter has been written to Rajan after Subramanian credited him for identifying the problem, this person said.
Rajan, who was RBI governor for three years till September 2016, is currently the Katherine Dusak Miller Distinguished Service Professor of Finance at Chicago Booth School of Business.
Subramanian had appeared before the panel last month as the chief economic adviser and briefed it on the bad loans issue. During his submission, he expressed scepticism over the handling of the NPAs and indicated that big-ticket loans by public sector banks were influenced. However, he did not elaborate who and how the approvals were influenced.
Subramanian also said there was an environment of fear among the bankers and they were reluctant to lend, besides retail lending.
The panel has already questioned senior finance ministry officials, including finance secretary Hasmukh Adhia and senior management of banks, about rising bad loans.
Members of the panel also demanded various documents including minutes of the board meetings of the public sector banks, in which high-ticket value loans were approved.
The banking sector is grappling rising non-performing assets, which touched ₹ 8.99 trillion or 10.11% of the total advances as of 31 December 2017. Of the gross NPAs, the public sector banks accounted for ₹ 7.77 trillion. The rising number of banking frauds has also become a serious cause of concern.