New Delhi: Former Reserve Bank of India Governor Raghuram Rajan said in his report to a parliamentary panel that a list of high-profile bank fraud cases was sent to the Prime Minister’s Office (PMO) for a coordinated action but was “not aware of any progress”. In his report to the panel, BJP leader Murli Manohar Joshi, Rajan said that the size of the frauds in the public banking sectors have been increasing but they are relatively small to the overall volume of the Non-Performing Assets (NPAs).Also Read - GDP Numbers Should Alarm us All, Govt Needs to be Frightened Out of Their Complacency: Rajan
“The RBI set up a fraud monitoring cell when I was Governor to coordinate the early reporting of fraud cases to the investigative agencies. I also sent a list of high profile cases to the PMO urging that we coordinate action to bring at least one or two to book. I am not aware of progress on this front. This is a matter that should be addressed with urgency,” he said in the report. Also Read - Rajan Says Migrants Need Money For Vegetables, Cooking Oil, Shelter; Food Grains Not Enough
According to Rajan, the RBI had set up a fraud monitoring cell during his Governorship to coordinate early reporting of such cases to the investigative agencies. Also Read - 'Shows Grave Crisis For Economy': Shiv Sena on Rahul Gandhi-Raghuram Rajan Talks
The former RBI governor blamed the overoptimistic bankers, government foot-dragging and slow growth as the main factors in the mounting of the NPAs and said that apart from it, the blame on the banks by the investigations for labelling frauds much after the frauds have taken place and fear of investigation slowed the process both in the UPA as well as the NDA governments.
“The investigative agencies blame the banks for labelling frauds much after the fraud has actually taken place, the bankers are slow because they know that once they call a transaction a fraud, they will be subject to harassment by the investigative agencies, without substantial progress in catching the crooks,” he said, adding.
Rajan noted the system’s ineffectiveness in bringing even a single fraud case to book and said these (frauds) are different than the normal NPAs. “Unfortunately, the system has been singularly ineffective in bringing even a single high-profile fraudster to book. As a result, fraud is not discouraged,” he said.
Blaming the public sector banks for inadequate due diligence before and after handing out loans, the former RBI Governor said that the banker performance after the initial loans were made… (were) also not up to the mark. In his report to the parliamentary panel, he also stated that a big number of non-performing assets (NPAs) originated in 2006-08 when India’s economic growth was strong.