Raghuram Rajan’s statement proves Congress is behind rise in NPAs: Smriti Irani

The Bharatiya Janata Party (BJP) on Tuesday said that a statement by former Reserve Bank of India (RBI) Governor Raghuram Rajan proves that the Congress party is responsible to the rise in non performing assets (NPAs). Addressing a press conference, Union minister Smriti Irani accused Congress president Rahul Gandhi, Sonia Gandhi and Robert Vadra of sabotaging taxpayers’ money.

“The Congress was exposed yesterday (on Monday). Raghuram Rajan's statement clearly proves that it is Congress who is responsible for increased NPA. Rahul Gandhi, Priyanka Vadra & Sonia Gandhi wanted to sabotage the taxpayer's money,” said Smriti Irani.

#WATCH Union Minister Smriti Irani briefs the media in Delhi https://t.co/xZno34AqwN — ANI (@ANI) September 11, 2018

Targeting Sonia Gandhi, the Bharatiya Janata Party (BJP) leader said that the UPA chairperson “led a government that attacked the very core of the Indian banking system”. She added, “Raghuram Rajan said that between 2006-08, the UPA functioning led to increased NPAs in India's banking structure.”

In a note to a Parliamentary panel, the former RBI Governor had said that over optimistic bankers, slowdown in government decision making process and moderation in economic growth mainly contributed to the mounting bad loans.

“A variety of governance problems such as the suspect allocation of coal mines coupled with the fear of investigation slowed down government decision making in Delhi, both in the UPA and the subsequent NDA governments,” Rajan had said.

He further said a larger number of bad loans were originated in the period 2006-2008 when economic growth was strong, and previous infrastructure projects such as power plants had been completed on time and within budget.

"It is at such times that banks make mistakes. They extrapolate past growth and performance to the future. So, they are willing to accept higher leverage in projects, and less promoter equity. Indeed, sometimes banks signed up to lend based on project reports by the promoter's investment bank, without doing their own due diligence," he said.

(With PTI and ANI inputs)