Check NPAs above Rs 500 mn for possible fraud, alert CBI: Govt tells banks

Check NPAs above Rs 500 mn for possible fraud, alert CBI: Govt tells banks: Lenders told to plug operational, technological loopholes in 15 days

Owner and regulator

This refers to the report “Check for fraud in NPAs above Rs 500 mn: Govt” (BS, February 28). On the face of it, there is nothing extraordinary in ‘owner’ of a business giving operational instructions to the staff working under him. GOI as the owner has the responsibility to ensure smooth functioning of PSBs and the recent developments have shaken the public trust in PSBs, which need to be restored quickly.
But in the given situation, the divergent instructions flowing from GOI and RBI will confuse the already strained managements of PSBs. More likely, they will start waiting for instructions from North Block even after getting operational or supervision-related instructions from RBI, as it is the Finance Ministry which decides the fate of the top management in PSBs.
This is an embarrassing situation for the country’s central bank which shoulders the responsibility of working under the RBI Act and administering Banking Regulation as legally mandated under the Banking Regulation Act,1949.
If GOI is not comfortable with the speed with which instructions are percolating down to banks from RBI, they should have a dialogue between them (GOI and RBI) and sort out issues. It is not in public interest for the two being seen talking differently and GOI sharing concerns in the media even before taking the banking regulator into confidence. Owner and Regulator have different kinds of responsibilities. Earlier this is conceded, the better for the image of the Indian Financial System which is already sagging. If banking gets affected by ego-related issues, the fall will be total and there will not be any public sector-private sector divide.
M G Warrier, Mumbai


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