Raghuram Rajan urges clean-up of bad debts

TIL Desk/Business/Bengaluru-Bad debt held by India’s banks must be cleaned up if the country is to achieve stronger economic growth, Reserve Bank of India Governor Raghuram Rajan said on Wednesday, in his second major speech since announcing he will step down in September.

In a speech, he defended actions taken by the RBI, including ordering state-run banks to conduct comprehensive asset quality reviews by March 2017, well after Rajan plans to step down to return to academia. “The cleaning up of bank balance sheets, and the restoration of credit growth are vital, related elements in the growth agenda,” he said.

“I know the process is working, so public sector banks will soon be set to finance the enormous needs of this economy once again.” Urging state-run banks and companies to continue dealing with the problem responsibly, he also repeated a call for the government to provide fresh capital for the banking sector.