Former Reserve Bank of India Governor Raghuram Rajan had sent a list of high-profile cases related to banking frauds to the Prime Minister’s Office for coordinated action, PTI reported on Tuesday.
“The RBI set up a fraud monitoring cell when I was governor to coordinate the early reporting of fraud cases to the investigative agencies,” Rajan said in a note to the Parliament Estimates Committee, headed by Bharatiya Janata Party MP Murli Manohar Joshi. “I also sent a list of-high profile cases to the PMO urging that we coordinate action to bring at least one or two to book. I am not aware of progress on this front.”
Rajan said the system has been “singularly ineffective” in punishing even a single high-profile fraudster. “The investigative agencies blame the banks for labelling frauds much after the fraud has actually taken place, the bankers are slow because they know that once they call a transaction a fraud, they will be subject to harassment by the investigative agencies, without substantial progress in catching the crooks,” he said.
Congress spokesperson Randeep Singh Surjewala said the PMO took no action on the list. “Raghuram Rajan has indicted the prime minister and the PMO on the fraud being committed and the fraudsters who are escaping,” he said.
In the note, Rajan also listed “irrational exuberance” by banks between 2006 and 2008 as one of the reasons behind the bad loans crisis. He also blamed a slowdown in economic growth and slow decision-making by successive governments for the problem.
Attributing the rise in non-performing assets to banks granting loans to the PM’s “crony capitalist friends”, Surjewala claimed Narendra Modi had devised a new “wink a loan scam” formula. “Naturally, the failure of Modi-nomics and Jaitley-nomics has decimated India’s economy, the banking system, and people’s faith in the economy,” he said.
Meanwhile, the BJP said the Congress-led United Progress Alliance government was responsible for the mess in the banking system and Rajan’s report proved it.
“UPA chairperson Sonia Gandhi led a government that attacked the very core of the Indian banking system,” said Union minister Smriti Irani. “Raghuram Rajan has said that between 2006-08, the UPA functioning led to increased NPAs in the Indian banking structure.”