Urjit Patel and members of Parliamentary Standing Committee

Urjit Patel grilled by members of Parliamentary Standing Committee

New Delhi, June 12 (IANS) Reserve Bank of India (RBI) Governor Urjit Patel was on Tuesday grilled by parliamentarians over challenges being faced by the banking sector, including the huge number and size of bad loans and frauds like the one in Punjab National Bank even as he said that the situation has improved and the central bank has taken some measures to strengthen the banking system.

Patel, who was called by the Parliamentary Standing Committee on Finance for questioning in relation to these issues, answered questions for over three hours.

He appeared along with the Deputy Governors and deposed under the topic “Banking Sector in India issues, Challenges and the Way Forward including Non-Performing Assets in banks and financial institutions”

The meeting was chaired by Congress leader Veerappa Moily and attended among others by former Prime Minister Manmohan Singh.

Some members of the committee also sought to know about the reasons for recent instances of ATMs running out of cash and NPA crisis and bank frauds (Nirav Modi).

Sources present in the meeting told IANS that Patel briefed about the current situation and said it has improved with regard to the issue of the Non Performing Assets (bad loans). The RBI has taken some measures to strengthen the banking system, he said but pointed out that the RBI did not have sufficient powers to discipline Chairmen of banks or change members of their Boards.

Patel had earlier given a written submission about what are the corrective measures that have been taken.

Sources said that Patel informed that measures adopted by the RBI to tackle the crisis include prompt corrective action (PCA) framework, implementation of Insolvency and Bankruptcy Code and a new resolution framework.

An MP said that Patel did not give any reply to some questions on demonetisation.

Citing reports of experts on the notes in circulation, which was earlier stated to be around Rs. 17 lakh crore, has now increased to Rs 18.5 lakh crore, a member sought to know from Patel that cash supply getting reduced, it was going up contradicting the purpose of the demonetisation.

Patel claimed the IMF and World Bank have praised its regulatory role.

About the latest situation on the notes in circulation, Patel is reported to have said said that the RBI would give the answer later.

Another member said people have lost trust in the banking system and everybody is withdrawing cash while ATMs are depleted. “People are putting the money somewhere else which is going to be a run on the bank,” he is believed to have said.

Responding to the query, the RBI Governor said, “everything is fine”.

He was also asked about Punjab National Bank and he was told that LoUs were going from “Nirav Modi to Nirav Modi” which the banks are supposed to inspect.

One another member told the Governor that RBI was not fulfilling its obligations to the people to which Patel said he will reply to these questions later on.

The next meeting of the committee will be held on June 19.