Tuesday, September 22, 2020
Home News Reports Raghuram Rajan's answers on the PNB scam and controversial 20:80 rule do not pass...

Raghuram Rajan’s answers on the PNB scam and controversial 20:80 rule do not pass muster

The media’s blue-eyed boy and former RBI Governor Raghuram Rajan today finally broke his silence around the PNB scam and other issues relating to it. Rajan was the RBI Governor for 3 years when the PNB scam was on-going.

In an interview to CNBC TV 18, Rajan was point blank asked who was to blame for the PNB scam. Rajan replied that there was “plenty of blame to go around” and named everybody from the management, the board of the bank to the auditors.

With regards to the RBI’s role, Rajan asked why the instructions of the RBI were not obeyed over time. He also revealed that back then he had expressed concern that although the RBI unearth’s frauds, but it could never bring to book the culprits. He also said that generally when the regulator spots a problem, it sends a message to the banks, and “basically assumes to some extent that the banks have fixed it”. He reiterated that “But surely there is plenty of responsibility to spread around.”

Sadly, Rajan’s answers expose him and the RBI:

- Advertisement -

1. Does the RBI had no responsibility to check the functioning of the banks to see if such frauds are being committed? Can it simply pass the buck to the others involved? If so do we even need the RBI?

2. Is it enough to “assume” that the banks have fixed a problem once the RBI identifies it? Does the RBI and its chief not have a duty to see if their instructions have been followed?

3. Rajan is now expressing concern that RBI was basically a toothless body. Did he make any moves to change this status?

He was also the RBI chief when the controversial 20:80 rule was notified by it, as one of the last order of the Finance Minister Chidambaram. It is believed that almost 50% of the entire benefit was cornered by 7 companies and Mehul Choksi’s Gitanjali Gems was again one of them, while 13 private companies in total benefited from this scheme. The India Bullion and Jewellers Association (IBJA) had written a letter to the then Reserve Bank of India Governor, Raghuram Rajan, warning him of the perils of the 20:80 scheme and accusing the Congress government of “deliberately yielding to the cronies” by changing the gold policy days before demitting office.

On the 80:20 scheme, Rajan said that the scheme should be separated from the Nirav Modi scam:

As far as I understand, the Punjab National Bank (PNB) scam started in 2011 and was unearthed in 2018. The gold scheme that is under the scanner at this point was something which lasted between May 2014 and November 2014. It seems to me very hard to argue that whatever happened then and I am happy to talk more about that, but whatever happened there was in any way related to the scam other than it happened in the same industry that there was gold involved. It is important to treat these as two separate issues

He, however, appeared to defend the 20:80 scheme:

Happy to talk about the 20:80 because the actions there as far as I understand were justified.

He further tried to shift blame on this scheme as well by claiming that the Government (the then UPA Government) was the “prime mover” in this scheme. He also justified the scheme by citing forex problems and Current Account Deficit. He also said that the beneficiary companies were selected by the Department of Trade in the Commerce Ministry. He also accepted that like any constraints being put on a system, some people could have made money and some would have lost money, and those who lost would have complained.

When asked about the timing of the 20:80 rule i.e. just a few days before a regime change, Rajan tried to avoid the issue and said he did not know the rationale behind the Government’s move. He also said that it was a period of rapid regulatory change due to a forex crisis. In the end, he does accept that as RBI Governor he does bear responsibility for any instruction from his office.

When asked if he could have said “No” to the Government, he spoke on other issues like suggesting that every policy would have good and bad effects. He again referred to the Government’s definition of selected importers and said that the RBI followed it. He then claimed that if the new NDA Government could have acted immediately if they thought this was an issue of importance. He also said that “procedures were followed” which was important. No direct answer to the question whether he could have said “No”.

Is this the same Raghuram Rajan who frequently commented on matters beyond the RBI’s jurisdiction, especially on the Government’s other actions? Is this the same Rajan who gave the famous quip: “I am Raghuram Rajan, I do what I do”? Rajan could not clearly answer whether he could have said NO to Chidambaram and if he did not say so, why he chose to not do so?

Clearly, the former RBI Governor has more to answer.

  Support Us  

Whether NDTV or 'The Wire', they never have to worry about funds. In name of saving democracy, they get money from various sources. We need your support to fight them. Please contribute whatever you can afford

OpIndia Staffhttps://www.opindia.com
Staff reporter at OpIndia

Related Articles

Trending now

Mumbai Police made actress Payal Ghosh wait till 2 AM, did not file sexual assault complaint against Anurag Kashyap: Reports

The BMC declared her society a containment zone to prevent the actress from filing a complaint.

ANI Editor rubbishes viral claim of the same person acting as a customer during demonetisation and farmer supporting agriculture Bills

Congress social media co-ordinator Vinay Kumar Dokania in a tweet alleged that a farmer interviewed by ANI over farm bills was the same man who praised demonetisation and Digital India in 2016

‘Secular’ anti-CAA protesters knew their Islamist comrades were trying to incite violence but did not inform police, WhatsApp texts reveal

The WhatsApp conversations revealed that the Delhi riots were organised and facilitated through provocation and active mobilisation of the masses.

‘Remember Kamlesh Tiwari? The same will happen to you’: Asst Stores Officer Shakeel Ahmad threatens UP Minister Rajeshwar Singh

As per police, a case has been filed against Shakeel Ahmed under Sections 504, 506, and 507 of IPC. Once the police finish investigation, they will arrest Ahmed as per law.

For AltNews, Muslims cease to be Muslims if they do not hate Narendra Modi or the RSS

AltNews questions the religiosity of Muslims who extend their support or are associated with the BJP and the RSS

NCB summons KWAN Agency CEO. Did you know Anurag Kashyap aide and film producer Madhu Mantena co-founded KWAN as well as Phantom films

Interestingly, until now, all the big Bollywood names which have emerged in the NCB's probe have links with KWAN Agency

Recently Popular

‘Whoever doesn’t want to watch the show, can go and read a novel, or turn off the TV’: Justice Chandrachud on Sudarshan News ‘UPSC...

"Read a novel, or turn off the TV", justice Chandrachud stated that if anyone doesn't like the content of the Sudarshan News show, they can choose not to watch it.

Fact Check: Is India going under lockdown once again from September 25?

PIB has debunked rumours on social media about the reimposition of lockdown from September 25 in the wake of Coronavirus surge.

An eyewitness tells media that Disha Salian was gang-raped by 4 men in the party held on the eve of her death: Here are...

An eyewitness has told News Nation that Disha Salian was gang-raped by 4 men in the party which she attended on the eve of her death on June 8.

‘Maal you have?’ Deepika Padukone’s name emerges in the Bollywood drug abuse probe as NCB investigation intensifies

In a sensational revelation, Bollywood's top actress Deepika Padukone's name has emerged in the latest drug abuse probe carried out by the Narcotics Control Bureau (NCB)

NCB summons KWAN Agency CEO. Did you know Anurag Kashyap aide and film producer Madhu Mantena co-founded KWAN as well as Phantom films

Interestingly, until now, all the big Bollywood names which have emerged in the NCB's probe have links with KWAN Agency

OpIndia, Indic Collective Trust and UpWord file intervention application in SC in Sudarshan News case, ‘Saffron terror’, fake news demonising Hindus find mention

OpIndia, Indic Collective Trust and UpWord Foundation have filed an application seeking an audience with the Supreme Court in a matter of Sudarshan News and UPSC Jihad show

Dia Mirza denies allegations of drug abuse, seeks legal action

Diz Mirza "strongly refuted" and "categorically" denied the "false" and "baseless" allegations levelled with mala fide intentions.

Nikhil Dwivedi, filmmaker and director of talent agency owned by Salman Khan, claims latter did not buy stakes in KWAN. Here are the facts

Uniworld Big Talent (UBT) owned by Salman Khan, holds major stakes in Big Bang Media Venture, the holding company which owns KWAN.

NDTV journalist of ‘chhota mota bomb blast’ fame is incensed at speech he finds uncomfortable: Read how

During one of his shows on NDTV, Sreenivasan Jain had claimed that terrorist Ishrat Jahan wanted to do a 'chota-mota' bomb blast.

Suspended AAP Rajya Sabha MP Sanjay Singh admits on TV that he broke Deputy Chairman’s mic

AAP leader Sanjay Singh, along with other opposition MPs, had created a ruckus in the Rajya Sabha after the passage of the Farm Bills.

Delhi riots: Tahir Hussain and Ishrat Jahan among five others accused of receiving Rs 1.61 crores to instigate riots, ‘manage’ anti-CAA protests

The police have stated that Ishrat Jahan had used a part of the cash she received to purchase weapons for the riots.

Uttar Pradesh: Man rips open pregnant wife’s stomach with a sickle to check the gender of foetus

Man in UP arrested after he cut open his wife's stomach, allegedly suspecting that she is going to give birth to another girl.

Mumbai Police made actress Payal Ghosh wait till 2 AM, did not file sexual assault complaint against Anurag Kashyap: Reports

The BMC declared her society a containment zone to prevent the actress from filing a complaint.

Sushant Singh death probe: Rhea Chakraborty’s judicial custody extended till October 6 by NDPS court

Rhea Chakraborty was arrested by NCB and sent to 14-days of judicial custody on September 8, 2020.

ANI Editor rubbishes viral claim of the same person acting as a customer during demonetisation and farmer supporting agriculture Bills

Congress social media co-ordinator Vinay Kumar Dokania in a tweet alleged that a farmer interviewed by ANI over farm bills was the same man who praised demonetisation and Digital India in 2016

Election affidavit complaints: Income Tax dept sends notices to Uddhav Thackeray and son, Sharad Pawar and daughter

Shiv Sena and NCP have shrugged off the IT notice as 'routine activities'.

Connect with us

244,181FansLike
454,646FollowersFollow
16,400SubscribersSubscribe