Embarrassment for govt after RTI reply by RBI confirms that Raghuram Rajan alerted PMO about bank defaulters in February 2015


An RTI reply by the Reserve Bank of India has confirmed that Former Governor Raghuram Rajan had indeed sent Prime Minister Narendra Modi a list of bank defaulters in February 2015.

This assumes significance in light of Rajan’s disclosure made last month to a government panel that he had sent a list of high profile NPA fraud cases to Prime Minister’s Office but he was not aware of any progress on his report.

At that point a section of pro-government news channels had desperately sought to discredit the revelation by reporting that Rajan was referring to Dr Manmohan Singh and not Modi since his tenure as the RBI Governor spanned over the two governments.

The RBI, in its RTI reply to website The Wire, has confirmed that Rajan had sent the list in February 2015, months after Modi had become prime minister in 2014.

In a note to Estimates Committee led by Murli Manohar Joshi, Rajan had said that the RBI set up a fraud monitoring cell when he was the governor to coordinate the early reporting of NPA fraud cases to the investigative agencies.

He had told the panel, “The investigative agencies blame the banks for labeling 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. The RBI set up a fraud monitoring cell when I was Governor to coordinate the early reporting of fraud cases to the investigative agencies. 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. This is a matter that should be addressed with urgency.”

The parliamentary panel had sought his expert advice and “expert view” on the NPA crisis. According to estimates, Indian banks are currently grappling with bad loans amounting to more than Rs 10 lakh crore.

Rajan’s note to the committee assumed significance in light of NITI Aayog Vice Chairman Rajiv Kumar’s astonishing claims last week that the former RBI governor was responsible for India’s current economic mess.

The fresh revelation will land the Modi government under more embarrassment in the election year as it is bound to face more accusations of being a conduit in enabling the loot of public money.

Delhi Chief Minister Arvind Kejriwal tweeted, “What action did Modi ji take against big bank loan defaulters? Allow them to flee the country?”

The CPIM’s Sitaram Yechury tweeted, “PMO & Finance Ministry have tried to hide for so long. In February 2015 itself, RBI Governor sent Modi “a list of high profile fraud cases of non-performing assets” but Modi didn’t act. But unpaid loans of his cronies waived off & the rest allowed to flee.”