He also wondered whether there was a need to be "more intolerant of sloppy practices at regulated entities, so that these do not result in massive scams years later?"

In his New Year message to all RBI employees, the academic-turned-central banker said the country is often described as "a weak state".

"Not only are we accused of not having the administrative capacity of ferreting out wrongdoing, we do not punish the wrong-doer -- unless he is small and weak,” he added.

"This belief feeds on itself. No one wants to go after the rich and well-connected wrong-doer, which means they get away with even more. If we are to have strong sustainable growth, this culture of impunity should stop," Rajan wrote in a 5-page letter to the 16,800-strong RBI staff.

However, he was quick to add that "this does not mean being against riches or business, as some would like to portray, but being against wrong doing".

Calling for strong and concerted action from and by them, Rajan, who has been chasing banks to arrest the rising tide of defaults by large borrowers, said RBI cannot and should not be seen as a 'paper tiger'.

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