Centre open to give more regulatory powers to RBI

The Centre is open to giving more powers to the Reserve Bank of India to effectively regulate public sector banks, Finance Minister Piyush Goyal said on Tuesday.

His assertion comes days after RBI Governor Urjit Patel, deposing before a Parliamentary panel, said the central bank had limited powers to regulate lenders.

“The government is open to the idea, if additional power was needed, we will sort it out,” he said to a question on the RBI's repeated demand for more policing powers vis-a-vis lenders.

The central bank had cited 10 areas where it lacked powers that included removal of bank directors, replacement of management and initiating liquidations of state banks.

After a meeting with state-owned bank heads, Goyal also said that PSU banks were working as a team to resolve the bad loan problem and that in the next two weeks, they will have a focused study for the credit needs of the "good borrowers".

He said banks had sufficient liquidity to support genuine lenders.

In Tuesday's meeting, banks decided to take up the credit needs of genuine borrowers in two stages. In the first stage, the needs of those who require in between Rs 200 and Rs 2,000 crore. In the second stage, borrowings of up to Rs 200 crore will be taken up

Goyal said that in order to overcome the problem of NPAs, banks have decided to work in consortium instead of taking decisions individually.

The finance minister said that banks will have a creditors' agreement amongst themselves to iron out problems related to consortium banking.

To a question on erosion of common man's faith in state-owned banks, he said, “Public money is extremely safe in PSU banks. The government stands 100% behind them. He, however, said he was not sure how safe the money was with private companies which had huge income tax dues."