A day after the RBI said it will take “appropriate supervisory action” in the Rs 11,400-crore Punjab National Bank fraud and termed it a failure of internal controls in the bank, Chief Economic Advisor Arvind Subramanian said more effective regulation was also needed from the RBI.
Addressing the annual convention of the Madras Management Association here on Saturday morning , Subramanian said instead of talking about the ‘Growth Story of India’ as he intended to , he would speak about “something that is in everyone’s mind today , it is the one news in the headlines”.
In its first official reaction after the surfacing of the PNB fraud , the RBI said on Friday , “it is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls”.
Subramanian also praised the progress and steps taken by the government in recapitalisation of banks , while adding that the reform of the system continues to be a challenge.
Talking about non-performing assets and the RBI’s progress in identifying NPAs in the past four years , he said , “At any point in time , the number of bad assets in the system are always 20 to 30 per cent more than what people tell you.”