Raghuram Rajan says it again: Bank clean-up must before growth

Bengaluru: Not for nothing did Prime Minister Narendra Modi once call Raghuram Rajan a “good teacher” of economics. On Wednesday, speaking to an audience of mostly small and medium enterprise (SMEs) leaders, and with the help of only two slides showing public and private bank lending trends, the outgoing RBI Governor answered his notorious, albeit victorious, detractors. Before PSBs can start lending for economic growth, their balance sheets have to be cleaned of enormous amounts of bad loans, he asserted, drawing applause from the very people who must feel most aggrieved over his tough policies.

Clearly indicating that while he may be giving up the post, he was not running away from the battle of ideas, Rajan, who announced on Saturday that he would return to his academic perch at the University of Chicago when his term at RBI ends, said with characteristic humour, “I keep reading my obituaries in the newspaper. I’m still alive. I will be leaving office in September but I’ll be moving in and out of India, reading and writing, and speaking at forums like this one. So, don’t write me off!”