Recently, a statement by RBI came as ‘the main limitation it has is that the public sector banks are not a  “banking company”  but“corporations” so they do not come directly under the scope of the Banking Regulation Act, 1949. It said that it’s supervisory process does not constitute an audit of banks to the panel.’

“With the number of commercial bank branches being more than 1,16,000 in the country it would be impossible to cover each and every branch under the RBI’s supervisory process,” the central bank said.

Reserve Bank Of India also blamed PNB for presenting a factually incorrect agreement report with regard to Letter of undertaking (LOU).

While replying to the questions put up by the panel, the RBI cribbed that it does not have regulatory powers over public sector banks (PSBs) with greater shareholdings of non-performing assets. As on December 31 last year the private sector banks had NPAs worth Rs. 1,07,796 crore, on the other hand, PSBs had NPAs worth Rs. 7,77,280 crore. These figures made it out of reach of the central bank.

In this regard, with ongoing situations, the RBI has demanded nine additional powers in relation to public sector banks. Which will include having the power to “remove the Chairman and Managing Director and appoint them.”

PNB Blamed Of Fraud by RBI
RBI Logo. Source: Google

It also wants the ability to grant and impose conditions on licenses.

The RBI wants to have a command in appointing people in managerial positions, including the power to supersede the Board of Directors and make application for winding up the errant banks.

Mr. Urjit Patel (RBI governor) was interrogated by a few parliamentarians on the recent reports of ATMs running low on cash and the also asked the major question of exactly how much currency has returned to the banking system after demonetization.

“Mr. Patel was not exactly forthcoming. He did not answer many of these questions. He insisted that steps taken to bring down the non-performing assets are bearing fruit and the NPAs are going down”

A senior Opposition MP who attended the meeting said.

 

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