Two damning portrayals of Indian finance

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Viral Acharya, the former deputy governor of the Reserve Bank of India, grimly concludes that a “silent crisis” has been unfolding in India’s banking system

who leave office often write memoirs. Few are as damning of the financial system they once served as Urjit Patel, the governor of the Reserve Bank of India in 2016-18, and Viral Acharya, its deputy governor in 2017-19, who is now an academic atStern School of Business. In separate books, they tell stories of rampant government meddling in the banking system. Both stood down before their terms ended. Their books suggest why.

Mr Patel describes how Indian savers, to whom he dedicates his book, see their funds used by government-controlled banks and other financial institutions for “vague objectives”, such as supporting politically connected states and companies and, sometimes, the stockmarket. The distortions undermine banks’ incentives to apply the scrutiny needed to properly allocate credit.

 

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