Raghuram Rajan, former Governor of the Reserve Bank of India (RBI), has linked corruption under the UPA government as the primary cause of non-performing assets (NPAs) in Indian banks. In a recent interview, Rajan explained that following the global financial crisis, several projects began facing severe delays due to corruption scandals, land acquisition issues, and other regulatory obstacles. These factors, he argued, significantly contributed to the rise of NPAs.

Rajan praised the Modi government for addressing these issues and helping banks recover by implementing key measures, such as the Asset Quality Review. He recalled how, during his tenure in 2014, the RBI decided to stop the moratorium on bad loans that had been in place during his predecessor's term. This decision led to a major cleanup of bad loans, which had been hidden on bank books as performing loans.

He emphasized that this cleanup process was vital for restoring the health of the banking system, which had been clogged with bad loans, thereby preventing banks from extending new credit. Rajan highlighted the collaboration between the RBI and the government, with the government providing necessary capital to banks to enable them to continue lending and supporting economic growth.