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NPA resolution ignores the biggest cause of the issue - bankers' complicity

Raghuram Rajan, former RBI governor, while speaking in mid-2106 about PSBs, blamed bad loans on groupthink and herd instinct

Debashis Basu

The Central Bureau of Investigation (CBI) has filed a case in the Andhra Pradesh High Court involving a public sector bank (PSB). The bank had given a loan against a piece of land as collateral. The borrower wanted a short-term loan. He was expecting some foreign investment and once that came in, he would pay back the loan. Bankers hear such cock and bull stories all the time from small and medium entrepreneurs who may be crooks or dreamers. They are supposed to ignore such stories, measure the risks and guard their interests when considering any loan application.   What did the banker ...