WHAT IS THE SPAT?

FM Arun Jaitley on Tuesday blamed the RBI for failing to stop a lending spree between 2008-2014 that left banks with huge bad debts — the latest in a row between the govt and central bank

THE STORY SO FAR

On Friday, RBI Deputy Governor Viral Acharya warned undermining a central bank's independence could be “potentially catastrophic”. Acharya’s comments indicate RBI is pushing back against pressure to relax policies The finance ministry wants

RBI to relax restrictions on 11 state-owned banks; RBI believes its actions are preventing formation of future NPAS, that lending restrictions haven’t affected credit offtake

cil (FSDC), which Jaitley chaired after returning from the USISPF event and attended by RBI governor Urjit Patel. The sequencing was such that the FM’S remarks and their tenor were already headlines even before the meeting started. Though neither Jaitley nor Patel directly engaged in

WHAT JAITLEY SAID

“During 2008-14, after the global economic crisis, to keep economy artificially going, banks were told to open their doors and lend indiscriminately,” Jaitley said in a speech attended by heads of US firms. “The central bank looked the other way. I am surprised that at that time, the govt looked the other way, the banks looked the other way, I don’t know what central bank was doing. It was a regulator...they kept pushing truth below the carpet.”

dialogue, people familiar with the development revealed that senior officials from either side differed aggressively on issues such as offtake of credit and enhanced liquidity to cash-strapped nonbank finance companies (NBFCS).

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