RBI Governor Raghuram Rajan on Wednesday urged banks to clean up their bad debt, calling it key to achieve stronger economic growth, in his second public appearance since saying he will step down in September.
“I am here to talk on resolution of financial distress. I’m talking about obituaries rather than birth announcements,” said Rajan “It feels like in the last few days I’ve read a lot of my obituaries and I’m still here for two-and-half months in this job.”
In his speech, Rajan defended the actions taken by the central bank, including ordering state-run banks to conduct comprehensive asset quality reviews of their balance sheets.
Due to bad loans, PSU banks unwilling to lend more, he said.
Rajan urged state-run banks and company promoters to deal with the problem, while also calling on the government to infuse capital to the sector — steps he has previously advocated during his tenure.
“To the question of what comes first, clean up or growth, I think the answer is unambiguously “Clean up!,” Rajan said in a speech to industrialists in the southern city of Bengaluru.
Saying he will probably be a lot more in India after he steps down, Rajan said “don’t write me off yet”.
The speech is Rajan’s second public appearance since he unexpectedly said on Saturday he will step down after his tenure ends in September.