TOUGH TASK

The Hitavada - - THE OPINION PAGE -

RE­SERVE Bank of In­dia’s Gov­er­nor Dr. Ur­jit Pa­tel de­serves full sym­pa­thy from the na­tion when he asks for more pow­ers to tackle the prob­lems of the Public Sec­tor Banks (PSBs) whose ac­cu­mu­lated loss in fis­cal end­ing March 2018 amounts to a whop­ping Rs. 87,000 crore. To the Par­lia­men­tary Stand­ing Com­mit­tee on Fi­nance, Dr. Pa­tel has urged for more pow­ers so that he would be able to reg­u­late the public sec­tor banks ef­fec­tively. In a way, Dr. Ur­jit Pa­tel has sought to take tough ac­tion against PSBs that are fraught with count­less frauds, but needs more pow­ers to be able to achieve that task. This was the crux of his pre­sen­ta­tion be­fore the Stand­ing Com­mit­tee on Fi­nance.

The is­sue of more pow­ers to the RBI has come up in such an em­phatic man­ner for the first time. Yet, pre­vi­ous RBI Gov­er­nors, too, had asked for more pow­ers to tackle the bank­ing cri­sis that was loom­ing large for the past twenty years. Dr. Pa­tel de­serves ap­pre­ci­a­tion for his courage to state facts as they are. Re­port­edly, he has in­sisted upon the full ac­count­abil­ity of the Boards of Di­rec­tors of the PSBs in cases of frauds or mis­man­age­ment of non-per­form­ing as­sets (NPAs). In or­der to make the Boards of in­di­vid­ual banks more re­spon­si­ble and ac­count­able, he has tried to re­duce the re­spon­si­bil­ity-quo­tient of the Cen­tral Bank in nuts-and-bolts man­age­ment of the PSBs. This coura­geous stand is most wel­come, par­tic­u­larly against the back­ground of the huge losses the PSBs have been suf­fer­ing.

The is­sue of full ac­count­abil­ity of the Boards of Di­rec­tors of in­di­vid­ual banks in public sec­tor needs to be con­sid­ered in com­plete depth. Fac­tu­ally speak­ing, this is­sue must be ap­pli­ca­ble to pri­vate sec­tor banks as well. For, what hap­pened in the ICICI Bank as re­gards loans to a com­pany in which the hus­band of Bank CEO Mrs. Chanda Kochhar was a party, is good enough an ex­am­ple of full ac­count­abil­ity of the bank’s Board. But, presently lim­it­ing the dis­cus­sion to PSBs, we tend to agree fully with Dr. Ur­jit Pa­tel for mak­ing his point ef­fec­tively.

A crit­i­cal point must be con­sid­ered more fully at this stage. The Pun­jab Na­tional Bank (PNB) had in­sisted post-Ni­rav Modi fraud that it was sub­ject­ing its trans­ac­tions to the an­nual risk au­dit by the RBI. The ef­fort of the PNB was to re­duce the share of re­spon­si­bil­ity and ac­count­abil­ity in the fraud that duped the bank of thou­sands of crores of ru­pees. To cer­tain ex­tent, the PNB was right, too. But this pre­cise point lends a greater weight to Dr. Ur­jit Pa­tel’s ar­gu­ment in favour of more pow­ers to the RBI. For, as Dr. Pa­tel seems to sug­gest re­port­edly, that even the an­nual risk-au­dit had its lim­i­ta­tions in ab­sence of ap­pro­pri­ate pow­ers. True, in some quar­ters, this may be read as an es­capism. In such a sce­nario, it would be ap­pro­pri­ate for the Govern­ment to study this an­gle of more pow­ers to the RBI in all de­tails and di­men­sions and then only ar­rive at what­ever con­clu­sion. A hur­ried ‘yes’ or ‘no’ would not serve the right pur­pose.

Dr. Pa­tel’s appearance be­fore the par­lia­men­tary Stand­ing Com­mit­tee on Fi­nance comes at a crit­i­cal mo­ment when the na­tion has just known about the mas­sive and stun­ning cu­mu­la­tive loss to the public sec­tor banks in one fis­cal. It is a mat­ter of great con­cern that only two banks have recorded prof­its while oth­ers have suf­fered de­bil­i­tat­ing losses. The na­tion looks to Dr. Ur­jit Pa­tel as a pos­si­ble saviour of Indian bank­ing. His task is cer­tainly tougher than most may think. If he has to suc­ceed in en­sur­ing bet­ter reg­u­la­tory regime for the bank­ing sec­tor, then the Govern­ment will have to give the most se­ri­ous thought to the de­mand for more pow­ers to the Re­serve Bank. A pos­si­ble so­lu­tion can emerge, how­ever, only if the Govern­ment pushes aside the po­lit­i­cal com­po­nent in de­ci­sion mak­ing and turn to com­plete and un­com­pro­mis­ing pro­fes­sion­al­ism.

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