Former Reserve Bank of India (RBI) Governor Urjit Patel has said that the current bad loan mess and the resultant low capital buffers is because of failure on the part of banks, the government and the regulator till 2014.
Patel, while speaking at an event in Stanford University, listed out the areas of concern for India’s the banking sector, including high non-performing assets (NPAs), especially with state-run lenders, and current capital buffers being overstated and insufficient to tackle the huge stress.
“How did we get here? Plenty of blame to go around! Prior to 2014, all stakeholders failed to play their role adequately. Banks, the regulator, and government,” he said in the presentation.
After resigning as the RBI governor on December 10, 2018, amid sharp differences with the government, Patel said banks indulged in over-lending while the government did not ‘fully play’ it’s role.
He also conceded that the regulator should have acted earlier.
