RBI Guv questioned by PNB and PMC directors: Report

Reserve Bank of India (RBI) Governor Shaktikanta Das. (PTI Photo)

Reserve Bank of India (RBI) Governor Shaktikanta Das came under pressure at the bank’s board meeting last week, with two external directors, questioning him on the efficacy of RBI's inspection and supervision mechanism, according to a report by The Economic Times.

The inquiry is taking place at a time when the banking regulator is facing flak on social media, and facing the ire of depositors and financial market commentators, according to the report.

The board of directors, one from Punjab National Bank came under the spotlight when Nirav Modi and his uncle, Mehul Chowksi were bankrolled and defaulted on payment.

The other is the Punjab Maharashtra Cooperative Bank in Maharashtra, which was cornered by a realtor, HDIL recently.

“These incidents differ from each other and are not exactly related, but a few members were quite vocal about it. The governor explained the information-sharing system and collection of data by the RBI… In some cases, the data itself — even the audited numbers — were either inadequate or fudged,” sources told ET.

“Perhaps, it wasn’t an entirely fair question, but it was apparent that the RBI officials felt awkward. Maybe it was not expected,” said the source said.

According to sources, the PMC Bank used a “middle server” to manipulate data and convert the information in the bank’s core banking system (CBS) to hide information, The Economic Times reported.

“The data engagement between the RBI and cooperative banks is much less compared with scheduled commercial banks,” the person said.

“It appears, there was a parallel or another data mart in PMC Bank that was used to fudge information. It’s a complex operation, and difficult to believe that a handful of officials could have pulled it off,” said the person.

"The frequency is low, the format is loose and information can be sent via emails, unlike commercial banks which directly upload the data to the RBI in a specified format. No commercial bank could have done this simply because there is so much duplication of data. Fraud like this would have been immediately spotted,” said the senior compliance officer at a local bank, as per the report.

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