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Need to correct legal asymmetry in RBI's policing powers, says Urjit Patel

It was first time since the biggest scam in the nation's banking history in mid-February that the RBI has taken questions from the media

Press Trust of India  |  Mumbai 

Urjit Patel, RBI Governor
Urjit Patel, RBI Governor

Flagging concerns on its limited ability to police state-run lenders, which have recently seen a slew of scams, the Reserve on Thursday sought amendments to the Regulation (BR) Act "to correct the legal asymmetry".

RBI Urjit Patel, who had recently gone public with the legal limitations faced by the in regulating in the light of over Rs 130-billion scam at PNB, reiterated that there is an "asymmetry" in its powers between government and private

Elaborating the point, RBI Deputy NS Vishwanathan said: "This requires amendment to the BR (Regulations) Act.

"The has said the non-neutrality of RBI's powers comes from the provisions of the BR Act. That needs to be changed. The Governor has made the bank's position on this very clear."

These comments were made by both the officials at the customary post-monetary-policy-review press conference. RBI kept its key lending rate unchanged at 6 per cent, citing inflation concerns.

It was first time since the biggest scam in the nation's history in mid-February that the RBI has taken questions from the media.

While replying to a specific question if the is in discussions with government to amend the Act, Vishwanathan said there will be discussions on the requirement put forth by RBI.

Delivering a speech in Gujarat's capital Gandhinagar, Patel had recently made a strong case for banking regulatory powers of the RBI to be "ownership neutral", and had cited several statutes which prevent it from moving against the state-owned in the same way as their private sector rivals.

In the comments, which had come amid rising criticism of the for not being able to detect the PNB fraud, Patel had said RBI faced limitations like inabilities to remove directors or management, supersede the board, force a merger, or remove the or even revoke the licence of a

There are 21 state-run and the condition of over a dozen of them are a part of the prompt corrective action framework, wherein a huge pile-up of bad assets have resulted in RBI imposing restrictions on normal operations.

Patel's comment drew sharp reactions from the government with Minister asserting the central bank has enough regulatory powers over

had said that RBI should earn its autonomy and powers through its action instead of gaining it through laws.

First Published: Thu, April 05 2018. 18:32 IST