Former Reserve Bank of India (RBI) Governor Raghuram Rajan said on Wednesday that there was time to put together a firm plan for Yes Bank’s recovery as the problems it was facing was no secret to authorities.

Yes Bank had given us enough notice that it has been in difficulty, so there was enough time to put together a plan, Rajan said during an interview to CNBC-TV18.

While he hopes that RBI’s draft restructuring plan for Yes Bank works out in the best possible way, Rajan admitted that he does not know complete details. He, however, reiterated that there is an urgent need to clean up India’s financial sector.

Rajan said without a proper clean up, the economy would suffer more. Unwillingness to clean up has prolonged state of malaise in the Indian economy, he said.

He said the clean up’ has to be taken up on an emergency basis as the banking sector in India is facing deep confidence issues, which could result in further growth slowdown.

Rajan said some key steps towards the goal can be to fix governance issues, keeping balance sheets of banks clean and recapitalising them gradually.

The former RBI governor said the process of clean up was started in 2015 and it has already been five years. It is too long a period, Rajan said.

Raghuram Rajan also said no amount of interest rate cuts can help if credit growth is weak. He said the first task should be to fix the ailing financial system rather than cutting interest rates.

It’s like trying to send water through broken pipes, he said.

Raghuram Rajan’s statement comes days after Yes Bank was put under a 30-day moratorium by the Reserve Bank of India (RBI) for underperformance.

A chaotic situation followed until RBI announced a draft restricting plan to pull Yes Bank out of the crisis. The government has assured depositors in the bank not to panic and that their money is safe.

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