The members of the Parliamentary Standing Committee on Finance grilled RBI Governor Urjit Patel on Tuesday over challenges being faced by the banking sector including the huge number and size of bad loans and frauds like the one in Punjab National Bank.
Patel told the Parliamentary panel that the situation has improved and the Reserve Bank of India (RBI) has taken some measures to strengthen the banking system.
The RBI Governor was summoned by the Parliamentary panel for questioning in relation to the issues being faced by the banking sector.
Patel appeared before the Parliamentary panel along with the Deputy Governors. They all deposed under the topic “Banking Sector in India issues, challenges and the way forward including Non-Performing Assets in banks and financial institutions”.
The meeting was chaired by Congress leader Veerappa Moily and attended by former Prime Minister Manmohan Singh among others. The session continued for three hours.
Patel told the Parliamentary panel that the RBI “needs more powers to oversee PSBs”, IANS reported quoting its sources.
According to PTI, Patel also informed panel that the RBI is in communication with the government for discontinuing the practice of appointing the central bank's nominees on boards of PSBs to avoid to any conflict of interest between the regulator and regulated entities.
Regarding PSBs, Patel told the panel that the RBI has "inadequate" control over them and asked for more powers to regulate them.
According to PTI sources, the RBI Governor also answered queries regarding the USD 2 billion fraud allegedly committed by diamond merchant Nirav Modi and his associates at the Punjab National Bank.
In the context of this fraud, Patel reportedly said it was impossible to look after each and every branch of a bank in terms of an audit.
Another member told the Governor that RBI was not fulfilling its obligations to the people to which Patel said he will reply to these questions later.
He also said the International Monetary Fund and World Bank have praised its regulatory role.
The next meeting of the committee will be held on June 19.