Skip to main content

RBI again seeks more power to rein in PSBs

 RBI again seeks more power to rein in PSBs
The RBI has yet again made a strong case for more power to regulate public sector banks (PSB) effectively.
RBI Governor Urjit R Patel, who appeared before the Standing Committee on Finance on Tuesday, also submitted a detailed written response to questions that the members had raised.
The meeting was called to record the Governor’s evidence on ‘Banking Sector in India: Issues, Challenges and the Way Forward, Including Non-Performing Assets/Stressed Assets in Banks/Financial Institutions.’
Sources said the RBI, in a written submission, said Section 5(C) of the Banking Regulation (BR) Act defines a banking company as ‘any company’ which transacts the business of banking in India.PSBs are not companies, but corporations formed by statutes. They are, therefore, not ‘banking companies’ and the BR Act does not apply to them in full.
“Only those provisions of the BR Act specifically enumerated in Section 51 of that Act or elsewhere in that Act apply to PSBs. This forms a great constraint for a regulator and supervisor,” the RBI said. The regulator further said it has important powers under the BR Act to apply to private banks, but not to PSBs.
For example, in a PSB, the RBI can neither remove nor appoint a CMD or a whole-time director, grant licences and impose conditions, call a meeting of bank directors, depute its officers for board meetings or appoint observers.Sources said that Patel, in his initial and concluding remarks, informed the committee that steps taken by the RBI are giving positive results and there are some improvements on the stressed assets front. Urjit Patel, RBI Governor
Nirav Modi scam
He did not reply to repeated queries from panel members on the Nirav Modi scam and the final quantum of old currency notes that had back to the system following demonetisation. It is expected that RBI will give a detailed response in writing before the next meeting, scheduled for June 18.The panel, headed by senior Congress leader M Veerappa Moily, counts former Prime Minister Manmohan Singh as a member. It is expected to table its report during the forthcoming Monsoon session.
The Hindu Business Line, New Delhi, 13th June 2018

Comments

Popular posts from this blog

Shrinking footprints of foreign banks in India

Shrinking footprints of foreign banks in India Foreign banks are increasingly shrinking their presence in India and are also becoming more conservative than private and public sector counterparts. While many of them have sold some of their businesses in India as part of their global strategy, some are trying to keep their core expertise intact. Others are branching out to newer areas to continue business momentum.For example, HSBC and Barclays Bank in India have got out of the retail business, whereas corporate-focused Standard Chartered Bank is now trying to increase its focus on retail “Building a retail franchise is a huge exercise and takes a long time. You cannot afford to lose it,” said Shashank Joshi, Bank of Tokyo-Mitsubishi UFJ’s India head.According to the Reserve Bank of India (RBI) data, foreign banks’ combined loan book shrunk nearly 10 per cent from Rs 3.78 trillion in fiscal 2015-16 to Rs 3.42 trillion last financial year. The banking industry, which includes foreign banks…

New money laundering norms stump jewellery sector

New money laundering norms stump jewellery sector Dealers with turnover of Rs 2 crore and above covered; industry says threshold too low The central government has notified the money laundering rules for the gems and jewellery sector with immediate effect. Now, any entity deals in precious metals, precious stones, or other high-value goods and has a turnover of Rs 2 crore or more in a financial year will be covered under the Prevention of Money Laundering Act, 2002 (PMLA, 2002). The limit of Rs 2 crore would be calculated on the basis of the previous year’s turnover, said the notification. The directorate general of goods and service tax intelligence has been appointed under the Act. Sources said the government’s move to apply the PMLA to the jewellery sector was a fallout of income-tax raids on jewellers soon after demonetisation last November, when it was found that they sold gold and jewellery at a huge premium and accepted old currency notes as payment. The notification, issued on Augus…

Confusion over branded food GST

Confusion over branded food GST The GST Council's statement over the weekend on applying tax on branded food items has left most of the trade confused.

Even though the Council has not changed the rates on food -0 per cent on unbranded stuff and 5 per cent on brands -many small traders who didn't levy GST earlier said they could come under the 5 per cent slab after the clarification.

While they predicted some increase in consumer prices, large players said they can absorb GST in many ways and keep prices steady.

"Trade is confused and hence on behalf of our chamber, we have asked our members to go ahead and charge 5 per cent GST," said Sushil Sureka, general secretary of the Ahilya Chamber of Commerce and Industry in Indore.

The statement clarifying the application of GST came after some businesses were found deregistering their brands and selling under corporate brand name without paying tax, after the Council exempted unbranded food from the new all-encompassing indirec…