Citing the ongoing IL&FS crisis, the past chief economic advisor Arvind Subramanian called for an asset quality review (AQR) like the one carried out on the banks by the central bank, to fully gauge the extent of the hidden stress in the system. Stressing on the need for the Reserve Bank to function in an autonomous way, he also hit out at the recent “politicisation” of the issue, saying it is detrimental to the country’s interests.
“I am proposing an AQR for non-bank lenders as well, as I think it’s time we come clean on this problem,” Subramanian said at the launch of his book ‘Of Counsel: The Challenges of the Modi-Jailtely Economy’ published by Penguin Random House India, here this evening.
He wondered how the IL&FS issue, which involves Rs 95,000 crore in debt, could be hidden from the world that subsequently caused so much of pain in the system. In the book, he blames RBI for creating the IL&FS mess saying its regulatory failure has created the IL&FS monster and that RBI should be held responsible for the same.
Though RBI has a good reputation, it doesn’t mean it’s always right, as for years, RBI was unable to grasp the seriousness of loan repayment problems or identify prolonged frauds of Nirav Modi and the likes, he says in the book.