TIL Desk/Business/New Delhi/ Terming the IL&FS crisis as a regulatory failure, former chief economic advisor to finance minister Arvind Subramanian has said the Reserve Bank should be held responsible for the crisis at one of the largest entities it has been regulating. In a soon to be published book, ‘Of Counsel: The Challenges of the Modi-Jaitley Economy,’ Subramanian says though RBI has a good reputation, it does not mean it’s always right, as for years, the RBI was unable to grasp the seriousness of the loan repayment problems or identify the prolonged frauds of Nirav Modi and the likes.
“Now, with the recent shenanigans involving IL&FS being revealed, this failure seems to have encompassed not just commercial banks but also non-bank financial companies. For these failures, the RBI needs to be held accountable,” he says in the book, published by Penguin Random House India. The book will be first launched in Mumbai on December 7 and then in Delhi on the 9th.
Subramanian calls upon RBI to step up its abilities in two key areas of supervision and part with its mammoth reserves to recapitalise the ailing state-run lenders in a decisive manner. “RBI must credibly step up its supervisory abilities, or even be willing to hand this over to a new agency created for this purpose. “A second area is recapitalising public-sector banks in a decisive fashion, putting them back on their feet so they can lend again,” he says.
