INSUBCONTINENT EXCLUSIVE:
This asset-liability mismatch is due to the lack of debate on public policy in India," the CAG said.New Delhi: The major reason for the
crisis being faced by banks is the absence of a developed bond market in the country, the official auditor said on Tuesday
Speaking at the launch of the Indian School of Public Policy here, Comptroller and Auditor General Rajiv Mehrishi maintained that the
root-cause of the banking crisis was neither the scams nor the non-performing assets (NPAs) but a result of state-run banks being
constrained to lend for long-gestation projects, many of which had stalled due to various factors."Of course, the thefts, the NPAs have all
contributed to the banking crisis, but it originates elsewhereIndia has no bond market, so banks have been forced to lend for long-gestation
is accounted for by state-run banks."This asset-liability mismatch is due to the lack of debate on public policy in India," the CAG said.On
the various scams in public sector banks that have come to light, the national auditor held the banking regulator Reserve Bank of India
responsible for the systemic lapses."What was the regulator doing all this timeis he, or is he not, accountable for the lapses that led to
the scams," Mehrishi asked.Industry chamber Assocham said earlier this month that the successful resolution of the NPA issues through the
new Insolvency and Bankruptcy Code (IBC) will help deepen India's corporate bond market that is highly concentrated in AAA-rated
bonds.Citing its study jointly conducted with rating agency Crisil, the industry chamber had said: "India's corporate bond market, which
contributes 17 per cent to the country's GDP and is highly concentrated in the AAA-rated bonds, is expected to change once the IBC brings
taken steps to reform the bankruptcy laws which, along with other structural reforms, led to a significant growth in the corporate bond
market within their financial markets.
