New Delhi:A parliamentary panel on finance has summoned Reserve Bank of India (RBI) governor Urjit Patel to answer questions about the spate of scams in the Indian banking system. Patel was asked to appear before the panel on 17 May and address queries regarding banking sector regulations, a person familiar with the development said, declining to be named.
“It was decided to ask RBI Governor to be present in the meeting of standing committee of finance on 17 May. The issues that would be raised would include the alleged bank frauds and also on NPAs. The RBI had issued certain directions and those would be discussed when he is present before the parliamentary committee," said a second person aware of the development, also requesting anonymity.
The panel has also quizzed Rajiv Kumar, secretary, department of financial services, about the recent developments in the banking system.
Kumar made a presentation on the steps taken by the government to improve the operations of state-run banks.
Even as the banking system was struggling with high levels of non-performing assets, it was hit by a Rs12,636 crore scam at state-run lender Punjab National Bank involving firms belonging to jewellers Nirav Modi and Mehul Choksi. Besides this, there have been at least six more instances of state-run banks being defrauded or defaulted upon that are being probed by investigating agencies.
Private banks have also faced their share of trouble with conflict of interest allegations coming up against Chanda Kochhar, managing director and chief executive of ICICI Bank, relating to loans given by the bank to the Videocon group as the group’s chairman Venugopal Dhoot had business dealings with Kochhar’s husband Deepak.
Stressed assets in the banking sector are estimated at more than Rs10 trillion.
Stepping in to improve the management and processes at state-run banks, the government has issued a slew of instructions to the banks including a review of all NPA accounts above Rs50 crore, closure of some international operations, upgradation of technological and risk management systems and better human resource (HR) practices. It has also reconstituted the bank board bureau to manage top-level appointments at these state-run banks and address HR issues.