"We need to go behind and investigate what has brought in this situation," Rai said, pointing out that banks lacked the necessary appraisal skill-sets and debt is being used by over-leveraged companies to fill in for their losses.
"How did we allow borrowers to over-leverage?" the former CAG told an audience of bankers at a Dun & Bradstreet awards event here this evening, even as he acknowledged that his views will not have many takers in the room.
Rai said banks have embarked upon an "uphill task" and bad asset recognition and resolution is a "tough job".
"This is an excellent opportunity. The emerging paradigm should ensure we close the chapter, learn from the mistakes and face the future with greater determination that this does not repeat. We need an entire new banking redux. It is time for us to bring a whole new banking renaissance," he said.
"We would be stifling growth if we did not lend to the physical infra sector like roads, power, infra," he warned.
Rai pointed out that banks can begin this by resorting to "calibrated enthusiasm" while lending to the deserving sectors.
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