CAG Mehrishi questions RBI over banking crisis

New Delhi: Raising question over the monetary policy of the Reserve Bank of India (RBI) in the present banking crisis, the Comptroller and Auditor General of India (CAG), Rajiv Mehrishi asked what the “country’s regulator was doing when the banks were lending huge amount of loans.”

Mehrishi, who was speaking at the launch of the Indian School of Public Policy (ISPP) on Tuesday, said, “In the present banking crisis, we all have a narrative about how it can be sorted out, recapitalisation of course, which is a very strange word to be used for the subsidies, but nobody is asking the real question that what actually the regulator (Reserve Bank) was doing. Were they fulfilling their duties or not? Are they accountable or not?”

“The major cause of the current banking crisis is a huge asset-liability mismatch, but nobody is talking about this, there is a lack of public policy debate,” he added.

The CAG also pointed out that the banks’ mismanagement, as well as theft of public money, are amongst the reasons behind the mess in the banking sector.

“If the banks were going berserk with their lending, then what was the regulator doing? And if it is accountable for this crisis or not, that is also a narrative nobody is talking about,” he stated.