New Delhi: Defending herself and the incumbent Central government's position on the current situation of state-run banks, Finance Minister Nirmala Sitharaman on Wednesday hit out at the Congress-led United Progressive Alliance (UPA) and said that she holds former Prime Minister Manmohan Singh- and former Reserve Bank of India (RBI) governor Raghuram Rajan responsible for degrading public sector banks (PSBs) to their 'worst phase'. Delivering a lecture at the prestigious Columbia University's School of International and Public Affairs here on Tuesday, Sitharaman said that giving all the public sector banks a “lifeline" is today her primary duty.

"I'm taking a minute to respond… I do respect Raghuram Rajan as a great scholar who chose to be in the central bank in India at a time when the Indian economy was all buoyant," Sitharaman said during the lecture organised by the Deepak and Neera Raj Centre on Indian Economic Policies of the Columbia University.

Further taking a dig at Rajan, Sitharaman said, "It was in Rajan’s time as Governor of the Reserve Bank that loans were given just based on phone calls from crony leaders and public sector banks in India till today are depending on the government's equity infusion to get out of that mire," she said.

"With due respect, I’m not making fun of anybody but I certainly want to put this forward for a comment which has come like this. I have no reason to doubt that Rajan feels for every word of what he is saying. And I'm here today, giving him his due respect, but also placing the fact before you that Indian public sector banks did not have a worst phase than when the combination of Singh and Rajan, as Prime Minister and the Governor of Reserve Bank, had. At that time, none of us knew about it," she said.

Both former PM and former RBI Governor have criticised the Modi government for not doing better on the economy because the government was extremely centralised and the leadership does not appear to have a consistent articulated vision on how to achieve economic growth.

Sitharaman also said while she is grateful that Rajan did an asset quality review, but people should know what makes the banks ailing today. "I am grateful that Rajan did an asset quality review but I’m sorry, can all of us put together also think of asking what ails our banks today. Where has it been inherited from," she added.

The event was also attended by former NITI Aayog Vice Chairman Arvind Panagariya, professor and eminent economist Jagdish Bhagwati and India's Consul General in New York, Sandeep Chakravorty.

Responding to a question, Sitharaman further pointed out that if there is a feeling that there has been a centralised leadership now, "I would like to say that very democratised leadership led to a whole lot of corruption. Very democratised leadership. The Prime Minister, after all is the first among equals in any cabinet," FM said.

(With inputs from PTI)