The Reserve Bank of India (RBI) in its financial stability reports never mentioned about the possible liquidity crisis in IL&FS, said Former Chief Economic Adviser (CEA) Arvind Subramaniam, while criticising the central bank for its regulatory failures.
“While RBI is one of the best institutions, we have. We had some massive failures like Infrastructure Leasing & Financial Services (IL&FS). If I am not wrong, if you go back, and see Financial Stability Reports of last 4-5 years, I don’t think IL&FS was specifically mentioned as a possible problem, something to be watched out for,” he said during an event here.
India’s biggest challenge at the moment is twin balance sheet problem, Subramanian further added.
He is a visiting lecturer in Public Policy at the Harvard University, was the CEA in finance ministry from October 2014 to June 2018.
With the IL&FS crisis, the NBFC (Non-banking financial company) sector has being in limelight, facing the major liquidity crisis.
To overcome this crisis in NBFC sector, Finance Minister Nirmala Sitharaman in her Budget also proposed that steps will be taken to help the crisis-ridden sector.