Opposes using RBI reserves to recapitalise banks Reserve Bank of India Governor Raghuram Rajan on Wednesday said bad debts, rather than high interest rates, impinged on public sector banks ( PSB)’ ability to lend and a regulator has no say on how a credit decision is taken but at best raise red flags and force balancing measures. “Bankers sometimes turn around and accuse regulators of creating the bad loan problem. The truth is bankers, promoters, and circumstances create the bad loan problem,” Rajan said at an interactive meeting with industry and trade in Bengaluru, organised by Assocham. “The regulator cannot substitute for the banker’s commercial decisions or micromanage them or even investigate them when they are being made. Instead, in most situations, the regulator can at best warn about poor lending practices when they are being undertaken, and demand banks hold adequate risk buffers,” said Rajan. Rajan has been criticised a number of times for not letting interest rat