Reserve Bank of India (RBI) Governor Urjit Patel on Wednesday banged critics. The one who had attacked the central bank after the alleged Rs 13,600-crore Punjab National Bank (PNB) fraud. They felt “anger, hurt and pain”. A bank is helpless due to the insufficient powers they have to manage the public banks. Patel added that the RBI is doing “all that we can to break this unholy nexus”.
By showing his deep agony over an epidemic of banking frauds. The RBI Governor Urjit Patel said that like the ‘Neelakantha’ (Lord Shiva), he will do everything possible to clean the rot in the Indian banking system. And to make it more transparent and efficient he is ready to consume all poison and face criticism. Also, an effort will persistently grow and become better with each trial.
RBI feel the anger, hurt and pain..
Patel said, “Success has many fathers; failures none. Hence, there has been the usual blame game, passing the buck, and a tonne of honking, mostly short-term and knee-jerk reactions.
All these appear to have prevented the participants in this discord from deep reflection and soul-searching. That can otherwise help to solve fundamental issues. The issues that are the root cause of such frauds and related irregularities in the banking sector.”
Breaking silence over the Rs 13,600 crore scam at PNB, he said: “I have chosen to speak today to convey that we at the Reserve Bank of India also feel the anger, hurt and pain at the banking sector frauds and irregularities.”
Patel said while delivering a lecture at the Gujarat National Law University in Gandhinagar. In plain simple English, these practices amount to a looting of our country’s future by some in the business community, in cahoots with some lenders.”
Rising Bad loans
Patel also identified the issue of rising bad loans (NPA). He says that the problems require immediate attention.
“Its magnitude is larger than Rs 8.5 lakh crores of stressed assets on bank balance sheets. Its significance stems from several practices in promoter-bank credit relationship that need immediate attention“.
The RBI has been fixing down on the failure of a banking system. The failure of identifying asset quality as non-performing. This is as per its norms by requiring that banks, whose “divergence” exceeds by 15 percent of the true nonperforming assets (NPAs) as per the norms, disclose the divergence.
Patel said that this should restore some market discipline against such practices, particularly in the case of private sector banks.
- Urjit Patel said that like the ‘Neelakantha’, the Reserve Bank will consume poison and face criticism.
- On the PNB scam, he said that the RBI ‘also feel the anger, hurt and pain in the banking sector frauds and irregularities’.