Rajan chides defaulters of loans who flaunt money

“If you flaunt your birthday bashes even while owing the system a lot of money, it does seem to suggest to the public that you don’t care. I think that is the wrong message to send,” Mr Rajan said in an interview to a private news channel. 

Mr Mallya had recently celebrated his 60th birthday in style in Goa despite his owing banks over Rs 7,500 crore. ‘’If you are in trouble, you should be cutting down your expenses,” said Mr Rajan in what appeared to be a veiled reference to Vijay Mallya, promoter of Kingfisher Airlines. 

The governor said that the clamour for lower interest rates should include efforts to get the banking house in order in respect of default recoveries. “The system has been geared to favouring those who have the ability to work the courts. The policy that you follow is that during good times you take the upside but in bad times you go to banks and ask how much of a haircut are you going to take,” Mr Rajan said. 

Mr Rajan’s statement from Davos is his latest in his campaign for promoters having more ‘skin in the game’ and bearing a bigger portion of the sacrifice on bad debts. A fortnight back, he had asked central bank staff not to hesitate in going after the rich and powerful. Earlier, Mr Rajan identified corporates who were showing signs of financial weakness but were not yet classified as defaulters.