Arun Jaitley pointed out that the RBI should have had its ‘third eye’ open with regard to the PNB fraud. RBI governor Urjit Patel tried to lay blame on the government. But the government said the RBI had enough power to act.
Urjit Patel said that he is prepared to play ‘Neelakantha’ of the banking sector. Not unexpectedly, no one wants to take the blame for the PNB Scam, why would they? But there’s no way to disown the mistake, the government can try as it might but it owns 57 percent of PNB. The RBI too has adequate representation on the PNB board. If anything they’re both equally to blame.
The government’s stand is that RBI has the power to look into loans and other information regarding banks, that the government can’t do. RBI was also the one that forced the banks in the public sector to recognise NPAs in their books. This led to a rise in bad debts. But the RBI argues that it doesn’t have the authority to remove directors of banks or force mergers. It also puts the onus on the government as the promoter of government-owned banks. But the government still doesn’t get a say in the day-to-day functioning of the banks.
The government has so far pointed out lapses in the functioning of regulators, auditors, bank management and the RBI. Although the ministry did issue an advisory to the regulator. Patel defended the RBI calling out systemic obstacles, and the government where it should be making amendments to its acts is defending itself. Neither has limited powers and neither have their hands tied, a change in their attitude to the problem at hand can really help. More than where the blame lies, it’s important that this won’t happen again. Can they give us that assurance?