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‘The NPA Issue Has Been In The Making For Long’

Former Comptroller and Auditor General of India and Chairman of Banks Board Bureau Vinod Rai speaks to BW Businessworld’s Avishek Banerjee on a range of issues, including the issue of the autonomy of key institutions, the 2G verdict, and the banking scams

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Former Comptroller and Auditor General of India as well as until recently Chairman of Banks Board Bureau Vinod Rai speaks to BW Businessworld’s Avishek Banerjee on a range of issues, including the issue of the autonomy of key institutions, the 2G verdict, and the banking scams.


On his stint as the CAG

All that is history now. The good thing about the country and the political set up is that they permit the autonomy of the institutions to a very large extent. Whether it is the Election Commission, Information Commission or the CAG, these are constitutional institutions. And their autonomy has been built into the Constitution itself.  I think the government and the political set-up are very fair about it. However, what sometimes happens is that when you are looking into issues that impact someone in a position of authority, then obviously your job will not be easy because it is going to be difficult for both sides. Naturally, the person whom you are targeting is going to protect himself in a large number of ways. You have to be prepared for that.

On the 2G verdict

Most people don’t understand that there are two facets of this entire thing. The first is the audit part of it. And the other is the investigation part. As far as the CAG is concerned, it audits everything. The 2G audit report was questioned in the Supreme Court and they gave a verdict based on it. As far as the CAG is concerned, that issue is closed.  Ok? Then, there is the issue of criminal conspiracy, with which the CAG as nothing to do. The CAG reports are not even admissible as evidence in a court. It is a matter of investigation to prove a criminal conspiracy. That will always take its own course and I have no opinion on that.

On what ails the banking sector
There is a problem with the banking sector. There is a churn going on. The government and the banking regulator, they are struggling to reform it. And I am sure that over the course of time, the sector will be reformed. Because as far as the regulator and the government are concerned, they are at it. The problem of non-performing assets (NPA) is something that has been in the making over the past 10 years atleast. The massive accretion of NPAs has not happened in the past one year or two. These loans were advanced a time long back. Attempts were made to try and recover them, and to the extent they have not been recovered, they have become NPAs. There are issues of wilful defaulters also. So I think every institution which is supposed to be providing the remedial measures is at it. But these have to go through a legal process. That is why it is taking time.

On the banking scams
Banking scams is an expression the media is very fond of using. What actually happened was, as I said, that about 8-10 years ago, since the economic environment was benign and the going was easy, industry flourished, services flourished, loans were taken and were productive, repayment took place, etc. Then the environment started turning challenging. There were delays in getting statutory clearances which meant time overruns, which in turn meant cost overruns. And that is when difficulties started arising for promoters. There maybe some promoters who have indulged in malfeasance which probably have led to wilful defaults. That is an entirely different thing. These cases will take their own course; they are already at the investigation stage. But the banking industry all over the world has gone through a difficult time following the financial meltdown. Our economy, which is very much plugged into the global economy like other countries, is facing tribulations of that meltdown.

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npas Magazine 14 April 2018 vinod rai

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