Parliament panel wants to examine RBI's powers

Wednesday 09th January 2019 01:35 EST

A parliamentary panel has recommended setting up of a committee to evaluate the role, powers and authority of the RBI in its entirety and has said it expects the central bank to provide a coherent roadmap for 11 public sector banks to come out of its prompt corrective action (PCA). In its report tabled in Parliament, the standing committee on finance headed by Congress leader Veerappa Moily said, “The committee would thus recommend that the government should constitute a high-powered committee to evaluate the role, powers and authority of RBI in its entirety while also appraising the economic impact of the various NPA resolution guidelines/schemes formulated by RBI from time to time.”

It also said, “The proposed committee should look into those provisions of the RBI Act, Banking (Regulation) Act and other relevant statutes with a view to ensuring the accountability of RBI as the regulator of the banking sector, including the matter of having RBI nominees on the boards of banks.” The panel said both the RBI as the regulator and the central government as the majority stakeholder in public sector banks should formulate coherent policy responses, which will enable and empower the banks to overcome the present challenges and chalk out their growth path. “In this connection, the committee would like to emphasise that the present crisis which the Committee believes is transient, should not become an alibi for privatisation of public sector banks,” it said.

The panel also said that with a view to utilise the expertise of senior bankers, the retirement age of CEOs of PSBs can be raised to 70 years as in the case of their private sector counterparts. Regarding the state-run banks under PCA plan, the committee said it would expect the RBI to provide a road map for each of these 11 banks to come out of the PCA framework within a stipulated timeframe, so that they can resume their normal banking operations.

The committee also said, “The committee would therefore urge both the RBI and the government to constantly monitor the situation for each of these banks and relax/review the PCA framework especially in case of banks where even retail banking is prohibited.”

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