Urjit Patel Book On Indian Banking’s NPA Crisis To Release In July

Urjit Patel, who resigned as governor of the Reserve Bank of India in December 2018, will release a book later in July, his publishers have said.

Titled ‘Overdraft: Saving the Indian Saver’, Patel’s book focuses on Indian banking’s bad loans crisis, its causes and how he dealt with it as the RBI governor.

The book's description says that sovereigns do not need to earn or save before spending money. They can either print or borrow.

“In our country, where they own banks, they can use our deposits to lend and splurge for goals that may not always be economic in nature. Many rulers have succumbed to the temptation, with dire results—inflation, debased currency, payments crises, bankrupt banks, economic stagnation, loss of public confidence.

“After centuries of ruinous experiences, some governments learnt, others haven't, to control themselves, create self-governing Central banks and let them manage money and regulate banks,” it says.

The issue of unsustainable bad debts started as a trickle in 2015 and then became a "flood", it said. "In the forefront were some of India's largest government banks, and a series of tycoons who were running their empires on unpaid debts."

Patel worked with a '9R' strategy which would protect depositors' savings, rescue the banks and protect them from "unscrupulous racketeers", it says.

Books or memoirs written by two of his immediate predecessors—Raghuram Rajan and D Subbarao—had shed light on various subjects like the RBI's autonomy, interest rates or its stance on demonetisation.

Patel, under whose governorship demonetisation was carried out, resigned from the RBI in December 2018. The resignation came at a time when relations between the government and the central bank had soured, with the former threatening to invoke a never-before used clause to give directions to the monetary authority.

The RBI, under Patel, was reportedly averse to the government's wishes on getting extra capital held by the central bank, restructuring loans to small businesses and providing liquidity support to the troubled non-bank lenders.

Patel's resignation was followed by a long period of absence from public gaze. In June, he was appointed as the chairman of National Institute of Public Finance and Policy, a thinktank run by the Union Ministry of Finance.

His deputy at RBI, Viral Acharya, who gave a strong speech asserting RBI's autonomy and warned the government of the "wrath of markets", also resigned before the completion of his term.

Patel was seen as very strict on the issue of NPAs and governance at banks, especially the private sector ones. While he was governor, RBI replaced the heads of ICICI Bank Ltd. and Axis Bank Ltd., and started investigating Yes Bank Ltd. more closely.

The central bank started a thorough asset quality review of banks when Patel was a deputy governor, and he carried forward the same work as governor.