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Saturday, September 19, 2020

In Urjit Patel’s book: ‘Chekhov’s gun’ & preordained vanishing act

According to Patel, in playwriting there is a concept known as ‘Chekhov’s gun’: if there is a rifle hanging above the mantelpiece in Act One, it is going to be fired at someone by the end of Act Five.

By: ENS Economic Bureau | Mumbai, New Delhi | Updated: July 8, 2020 4:55:19 am
Former RBI Governor Urjit Patel. (File)

Urjit Patel had a stormy and eventful tenure of two years and three months as the Governor of the Reserve Bank of India (RBI), before he quit on December 11, 2018. While Patel has largely remained silent on his clash with the government on many issues after his departure from the Mint Street headquarters of the RBI, in his new book ‘Overdraft: Saving the Indian saver’ he writes about the‘9R’ strategy which would have saved public savings, rescued the banks and protected them from unscrupulous racketeers.

These racketeers knew how to subvert the system and siphon off public money. They did that ruthlessly which added to the ballooning non-performing assets (NPAs) and wilful defaults despite the “stringent monitoring” by the governments and the regulator.

According to Patel, in playwriting there is a concept known as ‘Chekhov’s gun’: if there is a rifle hanging above the mantelpiece in Act One, it is going to be fired at someone by the end of Act Five. “In the regulatory, enforcement and legal landscape around loan recoveries in India, the unused rifle usually disappears by Act Three, hence it is not credible since all stakeholders know about the preordained vanishing act,” Patel writes in the book, which is slated to be released on July 24.

He says it’s all about the increasing risk, in effect, due to the failure, over decades “to arrest a creeping banking sector-fiscalization”. In Overdraft, Patel explains the problem and how it blew up and how he would have resolved it if he had not been prevented.

In his first public meeting at a Stanford University summit last year, he blamed all the stakeholders — be it banks, the regulator or the government — for this state of affairs, saying that all three failed to play their role adequately prior to 2014. The regulator failed to understand that the assumptions being made by the banks on revival of stressed businesses were going awry, he said. The banks were also at fault for inadequate risk management policies and over-lending. On the other hand, Patel blamed the government for not questioning risk controls in government banks even as it was receiving significant dividends.

In a comeback on the Indian policy circle on June 22, Patel took over as Chairman of the National Institute of Public Finance and Policy.

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