Union backs RBI Governor for stern action against bad loans

Source: The Hitavada      Date: 16 Jun 2018 09:42:55




THE employees union of the Reserve Bank has, in a surprise move, backed Governor Urjit Patel’s for his stern action to stem the bad loan problem and other ills plaguing the public sector banks, and urged him, in a letter, to continue to actively monitor banks as an ‘alert inspector’ and not just as an ‘off-site surveyor’. The union support has come as a letter to the Governor on Thursday from the All-India Reserve Bank Employees Association.

The move also comes within days of the bank officers unions moving the Delhi High Court challenging the RBI decision to ask banks to refer the 40 largest dud loan accounts to the bankruptcy courts, saying the move will wipe out banks balancesheets which may also have a cascading impact on their jobs. These 40 accounts constitute over 40 per cent of the dud loans in the system. Earlier this week, the RBI Governor had appeared before a Parliamentary panel where he had reportedly made a strong case for more powers to effectively regulate public sector banks.

To a query from panel members on the Rs 13,500-crore fraud committed by diamond merchant Nirav Modi and his associates at the PNB, the Governor had reportedly said that it was impossible to look after each and every branch for audit purposes. “You have stressed that it is not possible for RBI to inspect/audit the 1,20,000-odd bank branches spread over the whole country. That is unexceptionable. But that should not mean that RBI will totally withdraw itself from on-site supervision and rely on reports sent by banks taking those as sacrosanct,” the All-India Reserve Bank Employees Association said in a letter to the Governor. The unions said if the RBI believes that banking authorities are responsible enough to mind their operations and RBI can safely rely on them that will definitely be a dereliction of duty.