This refers to the report “RBI needs more powers to oversee PSBs” (June 13). Media reports would give an impression that the constraints in disciplining Public Sector Banks (PSBs) are the invention of the present Reserve Bank of India (RBI) Governor Urjit Patel. Those who are new to the subject may access the report of the “Committee on the Financial System” (CFS: First Narasimham Committee, 1991) that has made several recommendations about management of PSBs including handling of stressed assets.
Since late 1990’s, the Ministry of Finance (MoF) perfected the art of silencing the RBI and went ahead with its agenda to use PSBs as a tool for resource mobilisation and deployment claiming ownership rights on PSBs and even the RBI. When things became unmanageably bad, everyone is trying to find a scapegoat in the RBI.
This is not to belittle the good work being done by the Parliamentary Committee by asking the right questions and getting very relevant answers on the challenges before the Indian financial system. It is the limbs of governance, in this case, the MoF, the RBI, and the political leadership is not working harmoniously to resolve a chaotic situation for which they are jointly responsible.
Ongoing coordination in the perception of problems and finding solutions among the three is the only remedy for avoiding repetition of the present chaos.
M G Warrier Thiruvananthapuram
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