After one and a half years of resignation, citing the personal reasons, Urjit Patel has now revealed the real reason of his resignation.
In his book Overdraft- Saving the Indian Saver, he has explained that “the moves to dilute the Insolvency and Bankruptcy Code” led the cause of his sudden exit from the central bank.
Patel was served as the 24th governor of Reserve Bank of India since September 2016 to December 2018.
Reasons for the Tussle
Former governor of the Central Bank says that,
“Instead of buttressing and future-proofing the gains thus far, an atmosphere to go easy on the pedal ensued,” “Until then, for the most part, the finance minister and I were on the same page, with frequent conversations on enhancing the landmark legislation’s operational efficiency.” He adds that “there were requests for rolling back the February circular” and “a canard was spread” to discredit the rules, including by incorrectly suggesting that small businesses would suffer disproportionately.
NPA build up in UPA Regime
Urjit Patel blames for the piling up of NPAs to the UPA government. He writes that, “The government is responsible for ensuring adequate capital for banks that are under its ambit on sustainable basis. The dominant owner pre-2014 didn’t question risk controls in government banks even as it received significant dividends,”
He also adds that, “There was a failure to acknowledge and rectify government banks’ inability to identify poor performing assets; and restructure and react quickly to improve recovery or cut losses.
Explaining the situation at that time, he writes, “A number of government banks did not have senior management in place, and governance suffered. This is a perennial shortcoming on account of bureaucratic inertia and political meddling. Ditto for the banks’ board of directors; it is common knowledge that this has traditionally been a placeholder for sinecure to political supporters,”.
Urjit Patel’s book has released today. In this he has mostly dealt with the policy matters and the stability of the banking system.