The fact remains that RBI is not micro managing things at banks' level. No doubt RBI has a statutory role to regulate and supervise banks in the interests of the economy and financial soundness.When ever the banks cross their limits in the grant of loans and the loan portfolios of banks go weak affecting the banks health , RBI takes stringent measures and advises banks to desist from such reckless grant of loans and keeps a close watch on such banks which are getting badly hit eroding the depositors money.It also ensures to issue strong regulatory prescriptions to ensure against deterioration of banks advances portfolio. No doubt RBI gives a long rope to even very badly run banks to correct themselves with directions, advice, moral suasion and penal measures etc. With all these, things are not changing and the banks position moves from bad to worse, RBI never fails to set right the bank and takes all measures under its command to protect the depositors interest. RBI as a regulator of banks has to ensure that the credibility of the banks does not get eroded affecting the financial stability. Banks are run on trust and this trust RBI ensures to maintain to ensure that there is no risk for financial stability.Unfortunately in Indian Scenario we have two sets of banks ie Private sector and Public sector. While RBI has 100 % control on Private sector banks the same cannot be said to be true with Public sector banks which are owned and in a way managed by the Government in practice. This makes for the difference and RBI is answerable to the Government for everything.RBI is right in not disclosing all the deafulters because many default due to business failures because of political,economic technological and social reasons and displaying their names can cause undue damages to the whole system of Finance and its credibility causing ireparable consequences. No doubt core wilful defaulters can be made transparent but even here patience pays a lot and RBI' s approach is appreciable. It does not mean contempt of Court which in all Probability will appreciate its stance in the interests of the economy. RBI as an Institution has never failed to protect the interests of the Government, the economy, the people is a wordly acknowledged fact though some lapses here and there do occur for which more than RBI the government is responsible. Further, more than RBI, The Government has more information on all PSBs as they are owned by the government. RBIs' powers are getting stripped day by day is also a well known secret known to all in the Financial World..
Dr T V Gopalakrishnan
(This comment appears in Money Life dated 14/4/16 against the article RBI digs its heels on disclosure about defaulters).
1 comment:
But how come the SME defaulters' names are in the newspapers when they are snapped with notice after notice? Why the large defaulters suddenly gets this sympathetic treatment? Mallya-like accounts, though willful defaulters are tolerated for years together after their delinquency is known? Why the directors of those defaulting companies are shielded by both the banks and the government instead of putting them on notice?
Coming to Courts and settlements, BSR statistics show that barely 20% is recovered from all the legal processes - lok Adalats, DRTs, and under SAFRAESI. Cannot Supreme Court prescribe time limits for settlement of the cases as all the bank cases have proof of transactions? Yes; proof of actions both by the bank and the borrowers in all the cases take time. But how long?
BIFR - the Bureau of Industrial Funeral Rights, to put it euphemistically, is the most wasteful outfit with no accountability and allowed even after the related Act is annulled.
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