RBI to Maha govt: Regulator competent to advice banks

Bankers doing good job, desist from criminal action

The Reserve Bank of India (RBI) has asked the Maharashtra government not to initiate any criminal action against bank branch managers for their alleged failure to provide financial assistance to farmers. It added that as the banking regulator, RBI is competent enough to give directions to banks.

Last month, Maharashtra chief minister Devendra Fadnavis had warned banks against shortcomings in extending financial assistance to farmers. As a result, some district collectors initiated criminal proceedings under Indian Penal Code against two dozen branch managers of public sector and cooperative banks that allegedly missed the targets.

In a strong missive to the state government, RBI deputy governor S S Mundra said: “We are concerned about it. The news (about actions) appeared 15-20 days ago. That time, RBI had flagged issue with the finance ministry, understood to have written to the state chief secretary.”

RBI plans to take up the issue again with the ministry and the state government. “Banks have done a good job particularly in agriculture lending in the past few years. If you look at budgeted figures (agri lending targets) for each year, which is increment over previous year, banks have exceeded targets,” he added.

If some direction is to be given to banks, it should be given through the proper channel, Mundra noted, adding that regulators are better equipped to do that. If each administrative authority tried to give direction, then the sanity of direction itself would be compromised, he said.