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NPA Probes Not Meant to Chill Lending: Rajan

Rajan warned that if some forbearance is given, it does not immediately imply that there was banality.

Published: 06th April 2016 05:12 AM  |   Last Updated: 06th April 2016 05:14 AM   |  A+A-

CHENNAI: Raghuram Rajan was firm in warning that probes against non performing assets(NPA) should not result in “chilling” bank lending and stop all risk-taking by entrepreneurs, which would adversely affect the economy.

“Both the Finance Minister and I have said that it is important that we investigate to see the mistakes as well as criminal activity that may have taken place, but do it based on judgements that would have had to be made at that time and don’t use today’s thinking and information to guess at that,” he said.

policy.JPGRajan warned that if banks give loans to some sectors which are currently weak, but the weakness is considered temporary, and if some forbearance is given, it does not immediately imply that there was “banality, there was corruption and it was a bad action”.

When questioned on the Kingfisher fiasco, Rajan said that he did not want to name anyone, but explained that forbearance in the past, in most cases, happened when the economy was slipping into trouble.

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