Letters: Why blame the RBI?

This refers to the editorial "Sting in the tale" (May 16). Being a bankers' bank, regulator and supervisor, no doubt the Reserve Bank of India (RBI) has the moral and physical responsibility to ensure that banks do not err, and indulge in transactions that are against prescribed rules and guidelines. However, one ought to acknowledge that the RBI, with its limited resources of manpower - 17,000-odd staff - cannot be expected to scrutinise millions of transactions involving exotic products carried out by banks and their associate business concerns, having thousands of branches, and whose only philosophy is to make money at any cost. All said, the RBI cannot escape from its responsibility of keeping the banking system sound and viable, but aberrations do take place in the context of an ever-increasing expansion of business having interlinkages with various markets, institutions and economies under a severe competitive and liberalised environment. An individual bank's greed and overconfidence that it can get away with any violations if detected and questioned, because of the generally deteriorating conditions in the economy in the area of adherence to corporate governance, accounting and auditing principles, uncalled for and unhealthy interference from various quarters in banks functioning in general and appointment of directors without complying strictly with the fit and proper criteria in particular, is the key force for the bank's indulgence in such undesirable activities where the RBI can have a say only after the event has occurred, and that too when the bank is taken up for an annual inspection. It's time to have a comprehensive review of everything for regaining the losing confidence of the public in the banking system.

T V Gopalakrishnan Bangalore

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