Skip to main content

RBI again seeks more power to rein in PSBs

By
 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

Post a Comment

Popular posts from this blog

RBI deputy governor cautions fintech platform lenders on privacy concerns during loan recovery

By
  India's digital lending infrastructure has made the loan sanctioning system online. Yet, loan recovery still needs a “feet on the street” approach, Swaminathan J, deputy governor of the Reserve Bank of India, said at a media event on Tuesday, September 2, according to news agency ANI.According to the ANI report, the deputy governor flagged that fintech operators in the digital lending segment are giving out loans to customers with poor credit profiles and later using aggressive recovery tactics.“While loan sanctioning and disbursement have become increasingly digital, effective collection and recovery still require a 'feet on the street' and empathetic approach. Many fintech platforms operate on a business model that involves extending small-value loans to customers often with poor credit profiles,” Swaminathan J said.   Fintech platforms' business models The central bank deputy governor highlighted that many fintech platforms' business models involve providing sm
Post a Comment
Read more

Credit card spending growth declines on RBI gaze, stress build-up

By
  Credit card spends have further slowed down to 16.6 per cent in the current financial year (FY25), following the Reserve Bank of India’s tightening of unsecured lending norms and rising delinquencies, and increased stress in the portfolio.Typically, during the festival season (September–December), credit card spends peak as several credit card-issuing banks offer discounts and cashbacks on e-commerce and other platforms. This is a reversal of trend in the past three financial years stretching to FY21 due to RBI’s restrictions.In the previous financial year (FY24), credit card spends rose by 27.8 per cent, but were low compared to FY23 which surged by 47.5 per cent. In FY22, the spending increased 54.1 per cent, according to data compiled by Macquarie Research.ICICI Bank recorded 4.4 per cent gross credit losses in its FY24 credit card portfolio as against 3.2 per cent year-on-year. SBI Cards’ credit losses in the segment stood at 7.4 per cent in FY24 and 6.2 per cent in FY23, the rep
Post a Comment
Read more

India can't rely on wealthy to drive growth: Ex-RBI Dy Guv Viral Acharya

By
  India can’t rely on wealthy individuals to drive growth and expect the overall economy to improve, Viral Acharya, former deputy governor of the Reserve Bank of India (RBI) said on Monday.Acharya, who is the C V Starr Professor of Economics in the Department of Finance at New York University’s Stern School of Business (NYU-Stern), said after the Covid-19 pandemic, rural consumption and investments have weakened.We can’t be pumping our growth through the rich and expect that the economy as a whole will do better,” he said while speaking at an event organised by Elara Capital here.f there has to be a trickle-down, it should have actually happened by now,” Acharya said, adding that when the rich keep getting wealthier and wealthier, they have a savings problem.   “The bank account keeps getting bigger, hence they look for financial assets to invest in. India is closed, so our money can't go outside India that easily. So, it has to chase the limited financial assets in the country and
Post a Comment
Read more