The committee headed by Congress's Veerappa Moily includes leaders from several parties besides former prime minister Manmohan Singh
Reserve Bank of India (RBI) Governor Urjit Patel faced tough questions from MPs on the Non-Performing Assets (NPAs) and the Rs 13,000-crore Punjab National Bank (PNB) scam involving businessman Nirav Modi as he appeared before the Parliamentary Standing Committee on Finance for on Tuesday. Sources said he told the panel that the RBI has limited powers to act against public sector banks such as PNB. "They are not completely under our control and we have no role in removal or appointing the chairman and managing directors, granting licenses and a host of other measures," he is learnt to have told the committee. "We have asked government to give us more powers to exercise control over public sector banks."
The committee headed by Congress's Veerappa Moily includes leaders from several parties besides former prime minister Manmohan Singh. Sources say a senior parliamentarian questioned Patel on how Nirav managed his illegal transactions for several years "despite the RBI's supervisory norms". Patel was also asked who was accountable for the failure.
TMC leader Dinesh Trivedi asked Patel why the LoUs (Letters of Undertaking) released on Nirav's name, were not caught. He also asked the governor to explain the reason for insufficient balance in ATMs. "How were fake LoUs circulating for several years and why did the RBI fail to notice this," Patel was asked by MPs. "Why didn't RBI check the credentials? RBI has powers to check and investigate every branch anywhere. Why didn't it use the power?," asked a senior parliamentarian.
Patel, in his presentation, blamed PNB and its directors. He replied that RBI had no option but to rely on the internal control system of banks. "We do not constitute an audit of banks and do not seek to replace it, this was consciously done," he said. He further said the PNB had furnished a "factually incorrect compliance report" that measures had been implemented, even after RBI cautioned banks confidentially about similar fraud in another bank. He assured that the RBI was working on strengthening the monitoring system.
According to sources, Patel in a written reply, informed the panel that it is impossible for RBI to keep a check on or monitor each and every branch of every bank.
In reference to RBI's recent report that Rs 18.50 lakh crore is lying with the public, Trivedi asked Patel to explain the reason for insufficient balance in ATMs. Trivedi also insisted that the purpose of demonetisation has failed as people are still hoarding cash. Patel informed the committee that International Monetary Fund (IMF) and the World Bank are satisfied with RBI's regulatory role.
The next meeting of the Standing Committee is scheduled for June 19. On the agenda is a discussion about the ways to tackle the growing menace of chit fund agencies. The meeting will also include an RBI representative.
(With inputs from Zee Business)
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