RBI needs more powers to oversee public sector banks: Urjit Patel to panel
RBI needs more powers to oversee public sector banks: Urjit Patel to panel: Sources said the governor assured the members that steps were being taken to strengthen the system...
Media reports would give an impression that the constraints in disciplining Public Sector Banks (PSBs) are the invention by the present RBI governor Urjit Patel sometime in August 2017 prior to his August 14, 2017 Ahmedabad speech. Those who are new to the subject may access the report of the “Committee on the Financial System” (CFS: First Narasimham Committee, 1991) which has made several recommendations about management of PSBs including handling of stressed assets.
Since late 1990’s finance ministry perfected the art of silencing RBI and went ahead with its agenda to use PSBs as a tool for resources mobilization and deployment claiming ownership rights on PSBs and even RBI. When things became unmanageably bad, everyone is trying to find a scapegoat in RBI.
This is not to belittle the good work being done by the Parliamentary Committee by asking right questions and getting very relevant answers on challenges before the Indian Financial System, baked in the institutional wisdom of RBI. One’s regret is the limbs of governance, in this case, the finance ministry, RBI, and the political leadership are not working harmoniously to meet a chaotic situation for which they are jointly responsible.
Ongoing coordination in the perception of problems and finding solutions among the three is the only remedy for avoiding repetition of the present chaos. Something similar to the need for the gears, accelerator and break to work coherently for an automobile to work efficiently.
M G Warrier, Thiruvananthapuram