Close X
Thursday, November 28, 2024
ADVT 
National

Ready To Be ‘Neelakantha’, Drink Poison To Clean System: RBI Chief Urjit Patel

IANS, 14 Mar, 2018 12:17 PM
    Expressing deep anguish over a spate of banking frauds, RBI Governor Urjit Patel said today that like the "Neelakantha", the central bank will consume poison and face brickbats, but will persist with endeavours to become better with each trial.
     
    Breaking silence over the Rs. 12,967 crore scam at Punjab National Bank, he said: "I have chosen to speak today to convey that we at the Reserve Bank of India also feel the anger, hurt and pain at the banking sector frauds and irregularities."
     
    Delivering a lecture at the Gujarat National Law University in Gandhinagar, he said: "In plain simple English, these practices amount to a looting of our country's future by some in the business community, in cahoots with some lenders."
     
    Mr Patel said RBI has in place asset quality review of banks and "we are doing all we can to break this unholy nexus".
     
    Invoking mythology, he said RBI has undertaken the cleaning up of the country's credit culture as the Mandara mount or the churning rod in the Amrit Manthan or the Samudra Manthan of the modern day Indian economy.
     
    Until the churn is complete and the nectar of stability safely secured for the country's future, someone must consume the poison that emanates along the way, he said.
     
     
     
     
    "If we need to face the brickbats and be the Neelakantha consuming this poison, we will do so as our duty; we will persist with our endeavours and get better with each trial and tribulation along the way," the Governor said.
     
    He also wished that more promoters and banks, individually or collectively through their industry bodies, would reconsider being on the side of "Devas rather than Asuras in this Amrit Manthan".
     
    He made a pitch for "making banking regulatory powers neutral to bank ownership and leveling the playing field between public sector and private sector banks".
     
    Observing that there has been a tendency in the pronouncements post revelation of the fraud that RBI supervision team should have caught it, Mr Patel said no banking regulator can catch or prevent all frauds.
     
    "While that can always be said ex post with any fraud, it is simply infeasible for a banking regulator to be in every nook and corner of banking activity to rule out frauds by 'being there'," he said.
     
    Referring to PNB, Mr Patel said the RBI had identified, based on cyber risk considerations, the exact source of operational hazard through which "we understand" now the fraud had been perpetrated.
     
    In particular, he said the RBI had issued precise instructions via three circulars in 2016 to enable banks to eliminate the hazard.
     
    "It turns out ex post the bank had simply not done so. Clearly, the internal processes at the bank failed in allowing the operational hazard to remain in place in spite of clear instructions to close it," he said.
     
    Mr Patel said the RBI will undertake actions against the bank that it is empowered to but this set is limited under its Banking Regulation Act powers over PSBs.
     
    Noting that "success has many fathers; failures none", the Governor said there has been the usual blame game, passing the buck, and a ton of honking, mostly short-term and knee-jerk reactions.
     
    "These appear to have prevented the participants in this cacophony from deep reflection and soul searching that can help solve fundamental issues that are the root cause of such frauds and related irregularities in the banking sector," he said.
     
    Mr Patel also flagged the issue of rising bad loans (NPA) saying that the problems needs immediate attention.
     
    "Its magnitude is larger than Rs. 8.5 lakh crores of stressed assets on bank balance sheets and its significance stems from several practices in promoter-bank credit relationship that need immediate attention," he said.
     
    The RBI has been clamping down on the failure to recognise asset quality as non-performing as per its norms by requiring that banks, whose divergence exceeds by 15 per cent of the true non performing assets (NPAs) as per the norms, disclose the divergence.

    MORE National ARTICLES

    Canadian Who Plotted Terror Attacks Deserves Life In Prison: U.S. Prosecutors

    Canadian Who Plotted Terror Attacks Deserves Life In Prison: U.S. Prosecutors
    U.S. prosecutors are requesting a life sentence for a Canadian man who admitted to plotting terrorist attacks on New York City landmarks at the behest of a high-ranking Islamic State operative.

    Canadian Who Plotted Terror Attacks Deserves Life In Prison: U.S. Prosecutors

    Search Continues For Accomplished B.C. Climber Missing In Alaskan Range

    Search Continues For Accomplished B.C. Climber Missing In Alaskan Range
    Marc-Andre Leclerc, 24, of Squamish, B.C., and his climbing partner Ryan Johnson, 34, of Juneau, Alaska, have been missing for nearly a week.

    Search Continues For Accomplished B.C. Climber Missing In Alaskan Range

    Vancouver Police Say Mom Accused Of Parental Abduction May Have Dyed Boy's Hair

    Vancouver Police Say Mom Accused Of Parental Abduction May Have Dyed Boy's Hair
    Police say Shawana Chaudhary, also known as Shawna, could also have changed her own appearance and may be using an old legal name.

    Vancouver Police Say Mom Accused Of Parental Abduction May Have Dyed Boy's Hair

    Richmond RCMP Investigating ‘Suspicious' Death Of Man Pulled From Fraser River

    Richmond RCMP Investigating ‘Suspicious' Death Of Man Pulled From Fraser River
    Mounties in Richmond, B.C., are investigating the suspicious death of a man whose body was pulled from the water near Steveston Harbour this weekend.

    Richmond RCMP Investigating ‘Suspicious' Death Of Man Pulled From Fraser River

    Missing 25-Yr-Old Vancouver Man Saeid Mirzaei Katik Lahijani Possibly Hiking Near Grouse Mountain

    Missing 25-Yr-Old Vancouver Man Saeid Mirzaei Katik Lahijani Possibly Hiking Near Grouse Mountain
    The Vancouver Police are requesting the public’s assistance in locating missing 25-year-old Saeid Mirzaei Katik Lahijani who was last in contact with family shortly after 5pm yesterday.

    Missing 25-Yr-Old Vancouver Man Saeid Mirzaei Katik Lahijani Possibly Hiking Near Grouse Mountain

    ICBC Spends $800,000 In Damage Claims For Ferrari That Crashed Into Pole

    ICBC Spends $800,000 In Damage Claims For Ferrari That Crashed Into Pole
    According to documents filed in B.C. Supreme Court, the plaintiff accidentally drove the 1990 Ferrari F40 into a utility pole on Sept. 9, 2012, leaving it badly damaged.

    ICBC Spends $800,000 In Damage Claims For Ferrari That Crashed Into Pole