Finance Minister Arun Jaitley criticises RBI for lending excess
Finance minister Arun Jaitley questioned the role of the central bank in the bad loan crisis gripping the country’s banks, saying the regulator hadn’t done enough to prevent indiscriminate lending,
extending the latest round of hostilities between the two sparked by deputy governor Viral Acharya’s speech on October 26.
“During 2008-14, after the global economic crisis, to keep the economy artificially going, banks were told to open their doors and lend indiscriminately —the central bank
looked the other way,” Jaitley said at the India Leadership Summit organised by the US-India Strategic Partnership Forum.
The finance minister said there was indiscriminate lending as the United Progressive Alliance (UPA) government,
which was in charge at the time, pushed banks into projects that weren’t viable.
“There were years during this period that normal bank credit growth should be around 14% annually, considering India’s growth rate. We were at 31% growth in one year,”
In a blog earlier this month
In a blog earlier this month, Jaitley had said there had been an exponential rise in outstanding bank loans, especially among public sector lenders,
which rose from Rs 18 lakh crore in March 2008 to Rs 52 lakh crore in March 2014.
The aggregate gross NPAs of banks rose from Rs 3.23 lakh crore at the end of March 2015 to Rs 10.35 lakh crore by end of March 2018.
Jaitley did not refer to Acharya’s speech in his comments either.
Among the issues over which the government and the central bank haven’t been seeing eye to eye are curbs on poorly performing banks,
liquidity provisions for non-banking finance companies, an independent payments regulator,
oversight of state-owned lenders, dividend paid by the Reserve Bank of India to the Centre and bad loan recognition rules.
TAX REFORMS TO DOUBLE TAX BASE
This has been possible because of the formalisation of the economy brought about by demonetisation and the GST.
This gave us the flexibility to take a departure from the past where there were only slogans,
Demonetization (was a) difficult step but helped us to make it clear that formalization of the economy is our clear intent.
“In four years, it has already
moved up to about 6.8 crore. This year, I am sure it will be very close to 7.5-7.6 crore, which is almost double,” he said, adding that the first year of GST implementation lifted the number of indirect tax assesses by 74%. GST was rolled out on July 1last year.
Recounting his government’s achievements is all villages are close to being connected by road. The target of houses-for-all is likely to be achieved by 2022 and all households will have electricity by the year end, he said
Jaitley think the whole concept of governance has seen a sea change,
the finance minister adding that corporate leaders no longer haunt the corridors of power because approvals are available online and discretion in the allocation of natural resources such as coal mines or telecom spectrum has been eliminated.