Bankers can't get blanket immunity on loan decisions: Raghuram Rajan

Raghuram Rajan has said there cannot be an absolute "blanket sort of relief" to the bankers seeking immunity from action by agencies like (Central Bureau of Investigation) CBI and (Central Vigilance Commission) CVC.

Rajan was speaking to a select group of journalists in Mumbai.

Rajan said, the decision about loans should be taken after carrying out the appropriate due diligence to be protected, PTI said. 

Rajan's statement comes at a time when nearly 149 employees of various banks have come under the scanner of the CVC for their involvement in corruption.

From the total, the biggest case pertains to Indian Overseas bank (IOB), which names 124 employees and 13 sweepers. They are among 193 officials facing corruption charges, and against whom, the CVC sought permission for prosecution. 

Out of these, nearly 49 cases are still awaiting a sanction for prosecution, which includes 23 from the public sector banks.

At a recent Bank Board Bureau (BBB) meet, the state-owned banks sought immunity from "unnecessary oversight" from agencies such as the CBI and CVC on decisions related to loans that are taken collectively, PTI said in a report.

"I think there has to be some responsibility, but the responsibility has to be for making the appropriate due diligence of taking measured decisions," Rajan said. 

"As long as somebody has invested the effort in taking the right decision, they shouldn't be held responsible based on which way the decision (goes)... Sometimes, you know, uncertainty creates the possibility that decision turns out wrong," he added.

Rajan said, striking an appropriate balance was the key. "As a society, we have to reach that (balance) which is that we have to respect the decision that was made so long as they were made in the right spirit, given the information that was available at that time," he said. 

Rajan who has been criticised for his interest rate decisions during his term and the growth in the economy as a result of that, said, “This discussion (on being behind the curve on interest rates) keeps going on without any economic basis."

Taking on his critics directly, Rajan sought an explanation from them about how the current rate of inflation was "very low" before he was accused of "being behind the curve”, and said such criticism are mere ‘dialogues’.