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Revealed: Why Urjit Patel quit as RBI governor
By BS Reporter
July 25, 2020 12:32 IST


Patel, who headed the RBI from September 2016 till his sudden resignation in December 2018, says in his book thta the government seemed to lose enthusiasm for the new bankruptcy law in the middle of the year he left the central bank.
Though Patel does not name anybody in the book, the mid-2018 period he refers to is the time when Piyush Goyal held temporary charge of the finance ministry between May and August.




IMAGE: Urjit Patel (right) with former finance minister Arun Jaitley. Photograph: PTI Photo.



The move to dilute the new bankruptcy law caused disagreements between the government and the central bank, former Reserve Bank of India (RBI) governor Urjit Patel says in his book Overdraft: Saving the Indian Saver, released on Friday.
Patel, who headed the RBI from September 2016 till his sudden resignation in December 2018, says the government seemed to lose enthusiasm for the legislation in the middle of the year he left the central bank.





Urjit Patel finally speaks about his stint at RBI


Patel's exit, Das's entry: The Inside Stories

The rift centred around a February 2018 circular issued by the RBI, which forced banks to immediately classify borrowers as defaulters when they delayed repayments, barred defaulting company founders from trying to buy back their firms during insolvency auctions, and push them into bankruptcy if a resolution timeline wasn’t met.
In a chapter titled ‘The Empire Strikes Back’, Patel writes the disposition with respect to the insolvency law or, more generally, in the conviction in the pathway, perceptibly changed in mid-2018. Instead of buttressing and future-proofing the gains thus far, an atmosphere to go easy on the pedal ensued.
Though Patel does not name anybody in the book, the mid-2018 period he refers to is the time when Piyush Goyal held temporary charge of the finance ministry between May and August.
“Until then, for the most part the finance minister and I were on the same page, with frequent conversations on enhancing the landmark legislation’s operational efficiency; we sought feedback on changes to preserve the principles that formed the bedrock of the IBC; which tweaks were likely to work; and where resource improvements could help; etc. I suspect the government may have felt that the deterrence effect -- ‘future defaulters beware, you may lose your business’ -- of the IBC had been achieved, and resolute follow-up to help complete the task was, therefore, unwarranted,” he writes.
But deterrence, Patel writes in the book published by HarperCollins, “works only if defaulters -- current and potential -- face economic consequences within a (reasonable) timeframe; otherwise we are in danger of a relapse to the days of the discredited Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002 and Recovery of Debts Due to Banks and Financial Institutions Act, 1993.”
Patel’s comments offer a peek into a tussle between the RBI and the government, which led eventually to a U-turn when the Supreme Court last year struck down the RBI’s February circular. The decision “made the insolvency regime vulnerable, possibly brittle,” Patel wrote, and warned that subsequent changes risk reversing gains from efforts to clean one of the world’s largest bad-loan piles.
“Since the time-bound threat of insolvency application is not credible anymore, it is unclear what threat points will compel resolution in 180 days (or, for that matter, even 365 days),” Patel writes.
Patel also says, in early 2019, the criteria were relaxed to ‘graduate’ five loss-making banks out of the prompt corrective action, and recapitalisation of these PCA banks helped them meet the criterion on net non-performing assets (NPAs).

In addition, extension and augmentation of forbearance for medium and small enterprise loans were granted at the same time. At the upper end of this forbearance (loans of Rs 250 million), businesses with annual turnover of up to several hundred crores were beneficiaries. “How does this square up with fairness in a country where the average per capita annual GDP is about Rs 150,000”? he asks in his book.
“We did not have to wait long for the camel’s nose to appear under the tent, forbearance to commercial real estate (living-dead borrowers) was granted in February 2020,” he pointed out.


Revealed: Why Urjit Patel quit as RBI governor
 

adsatinder

explorer
India is trapped in Recession Loop.

*कब तक बचोगे एक न एक दिन असलियत आपको बताना ही होगा, कि देश आर्थिक मंदी के जाल में फंस चुका है*


Jul 29, 2020 9:05 PM


घर मे शादी है पैसे नही है’ ….जब भी मुझे नोटबन्दी के दो दिन बाद जापान में दिया गया मोदी जी का भाषण याद आता है खून खोल जाता है 8 नवम्बर 2016 के शाम 8 बजे से भारत के दुर्भाग्य की शुरुआत हुई …..कल उसके प्रभाव को सरकार ने स्वीकार किया है……..

वित्त सचिव अजय भूषण पांडे ने मंगलवार को संसदीय स्थायी समिति (वित्त) को बताया कि सरकार मौजूदा राजस्व बंटवारे के फार्मूले के अनुसार राज्यों को उनकी जीएसटी हिस्सेदारी का भुगतान करने की स्थिति में नहीं हैं।
वित्त सचिव के ऐसा कहे जाने पर सदस्यों ने सवाल किया कि सरकार राज्यों की प्रतिबद्धता पर किस तरह से अंकुश लगा सकती है। नाम ना जाहिर करने की शर्त में एक सदस्य ने बताया कि इसके जवाब में अजय भूषण पांडे ने कहा, ‘अगर राजस्व संग्रह एक निश्चित सीमा से नीचे चला जाता है तो जीएसटी एक्ट में राज्य सरकारों को मुआवजा देने के फार्मूले को फिर से लागू करने के प्रावधान हैं।’

दरअसल GST कानून में साफ है कि राज्यों को 14 प्रतिशत वृद्धि दर के हिसाब से पांच वर्षों तक राजस्व कमी की भरपाई की जाए,लेकिन अब मोदी सरकार इससे मुकर रही हैं, जनवरी, 2019 से मार्च, 2020 की अवधि के दौरान राज्यों को किए जाने वाले मुआवजे का भुगतान करीब 60,000-70,000 करोड़ रुपये बैठ रहा है केंद्र को इसका भुगतान 2020 की पहली तिमाही तक करना था लेकिन अब तक वह रकम ड्यू है……. रेलवे को अपने 15 लाख कर्मचारियों को पेंशन देने 55 हजार करोड़ की जरूरत है वो भी नही है देने के लिए


जीएसटी से हासिल केंद्रीय राजस्व की बात करें तो वह तय लक्ष्य से करीब 40 फीसदी कम रहा है पिछले साल का,………..
पहले के वर्षों की तुलना में जीएसटी राजस्व घटा है। वहीं उपकर भी जरूरत से कम आया है।
यह कोरोना काल से पहले की बात हो रही है तो ऐसा क्यो हो रहा है हम।सब अच्छी तरह से जानते हैं कि भारत नोटबन्दी के बाद से ही आर्थिक मंदी के जाल में फंस चुका है
लेकिन सरकार यह स्वीकार ही नही करना चाहती कि देश मे आर्थिक मंदी है जीएसटी संग्रह में कमी का कारण भी आर्थिक सुस्ती है……..
कब तक बचोगे एक न एक दिन असलियत आपको बताना ही होगी आज वित्त सचिव अजय भूषण पांडे ने यह स्वीकार किया है…..……

कुछ दिनों पहले ही लिख दिया था कि जल्द ही वह दिन आने वाले हैं जब राज्य सरकारों के पास अपने कर्मचारियों को तनख्वाह देने के पैसे नहीं होंगे…..राज्य सरकारो ने अपने सारे सोर्स तो केंद्र सरकार के हवाले कर दिए हैं, जल्द ही सरकारी कर्मचारियों और सरकारी पेंशन धारकों को यह दिन देखना पड़ेगा जो मोदी जी ने बोला था …..’घर मे शादी है पैसे नही है’


 

citymonk

Super User
India is trapped in Recession Loop.
Do not raise such issues right now, even if these are facts. Try to understand China is standing just outside Leh and on other side is Pakistan too.
We need a strong PM to tackle China right now and pointing his previous mistakes and blunders daily will only make him weak in front of China at this hour.

Try to understand and support Government now for sake of India

Do not worry about bad economy at all.
Bad economy is also good thing for Indians, this way no refugees would like to come to India from Bangladesh, Afghanistan e.t.c.
And also those already here will soon like to go back.
 

adsatinder

explorer
Do not raise such issues right now, even if these are facts. Try to understand China is standing just outside Leh and on other side is Pakistan too.
Bad economy is also good thing for Indians, this way no refugees would like to come to India from Bangladesh, Afghanistan e.t.c.
With same Logic,
China will also not come into India to sink in bad condition of Economy !
LOL !
 

citymonk

Super User
With same Logic,
China will also not come into India to sink in bad condition of Economy !
LOL !
China is country which goes after natural resources of any country. It is your misconception China is not in India they already dictate and run Indian markets.

See phone in your hand, is this not Chinese.

What else China wants from India.

They already are masters of your Master. Even your PM cannot dare annoy them and is not allowed to even take China's name in his polite border talks in public.
 

Big Daddy

Super User
Actually, the solution to this problem is institutions. A country should never be run by one single person. That is the idea of democracy where people's problems are solved by people's institutions. Modi should go and play golf. India should have separate defense strategy institution like the Pentagon and RBI should worry about the economy. Congress should worry about stimulus and let state governments collect and enforce Coronavirus stats and policy. That is the only way a country can handle multiple problems at multiple fronts. A PM should only sign policies or reject them.

The vast majority of Indians (i.e., people in congress) do not want to work so they delegate their powers to the PM who in turn takes a unilateral decision that is less than perfect and cause delays in decision making as well.
 

Big Daddy

Super User
The most important money lesson from Beirut blast--- it takes a few seconds for a real-estate value to go to zero. Real-estate investments have risks as well so never invest all your money in real-estate.
 
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