![Raghuram Raja said 'The bad loan resolution process should reach a logical end'](https://media.newstracklive.com/uploads/business-news/economy/Sep/06/big_thumb/3236-rajan-6-reuters_59afa59553f21.jpg)
Chennai: The former governor of Reserve Bank of India (RBI) Mr. Raghuram Rajan who recently launched his book titled "I Do What I Do."
In the book launching interview, he has talked about how the bad loan resolution process should reach a logical end.
He also said in the interview about the government's capital support is important for the state-owned banks even if it means cutting allocations to other areas.
The interview was followed by many questions and answers which are target upon an ecosystem facing problems related insolvency and bankruptcy.
One of the interviewees has asked him, In your book you have written that despite the best and the brightest in RBI addressing the distressed assets situation, it was one area in which you couldn’t make much progress. How do you see the current strategy of dealing with NPAs differing from the steps you had taken?
To which the former RBI governor has said, "I think what we had missing was a Bankruptcy Code because any kind of restructuring happens with the ultimate threat that if it doesn’t happen in an appropriate way, the Bankruptcy Code will be invoked. So I think what is really good about the current situation is we have a Bankruptcy Code in place. We have to make sure that the functioning of the NCLT (National Company Law Tribunal) and so on is unhampered, and that it goes to its logical conclusion and the number of appeals to that process is limited so that it doesn’t become an endless circle of appeals. But if we can show some success there, then the Bankruptcy Code acts as a shadow to the processes that we structure so that everybody knows they have to work together quickly so as to resolve the situation; otherwise, it goes into the Bankruptcy Code. One of the remaining problems is still the ability of bankers to make appropriate decisions. They are scared of writing off loans for fear that there will be an investigation later. That issue we have to tackle. I understand that this anti-corruption bill that the government has may deal with some of that. It shouldn’t be that any consideration of loss, if the loss is taken for a longer-term benefit, is seen as a corrupt practice."
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