Jaitley blames central bank for bad loans crisis

Finance Minister Arun Jaitley today has  directly blamed the Reserve Bank of India for the country’s heap of bad loans. He accused the central bank of not doing enough and of looking away when banks carried on indiscriminate lending.

His open criticism against RBI followed by RBI Deputy Governor Viral Acharya warned against impeding the central’s bank autonomy in a strongly worded speech. Acharya’s speech last Friday was seen seen as a rare public outburst.

This was seen as a veiled reference to RBI pushing back hard against government pressure to relax its policies and reduce its powers. “You see (between) 2008 to 2014, after the global economic crisis, to keep the economy artificially going, banks were told open your doors and lend indiscriminately,” Jaitley said at India Leadership Summit organised by US-India Strategic Partnership Forum.

The finance minister questioned why the RBI did not perform its job of regulation. “I don’t know what the central bank was doing. It was a regulator… They kept pushing the truth below the carpet,” Jaitley also said.

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