Letter to BS: Govt should initiate reforms to improve working of PSBs

To ask the RBI to dilute regulatory norms is fraught with risks

This is with reference to “Govt asks RBI to water down PCA framework”  (August 21). Over the last few days, the government has requested the Reserve Bank of India (RBI) to dilute the prompt corrective action (PCA) framework, bring common equity tier 1 (CET 1) and provide regulatory relief to power companies who have defaulted on bank loans. The RBI had initiated asset quality review (AQR) to bring an element of transparency in actual non-performing assets (NPAs) of banks. 

Prior to the AQR, most banks were merrily concealing a large part of their NPAs and the regulator tended to adopt a