House panel wants RBI to be tough

A parliamentary standing committee has squarely blamed the management at the level of the Reserve Bank of India and the public sector lenders for the rising bad loans of the banks. It said the RBI needs to be a strict regulator.

“Mere issuing of guidelines by RBI does not seem to have yielded desired results in management of NPAs. The committee would therefore expect RBI to monitor and follow it up with banks and financial institutions on a regular basis till concrete outcome materialises,” the Standing Committee on Finance said in its report tabled in Parliament on Wednesday.

Such a pro-active action by RBI will also enable it to review the guidelines, whenever required and plug loopholes, if any. “The committee would not like the RBI to be a passive regulator, when major lapses occur in banks, it would be in the fitness of things if RBI exercises its regulatory powers vis-à-vis banks to make punitive action in cases of default and to enforce guidelines,” the committee said.

With regard to CDR mechanism, it said that a majority of CDR cases have failed to achieve the desired objectives.

As of September 2015, the net Non Performing Assets of public sector banks stood at Rs 2,05,024 crore, while the Gross NPAs were at Rs 3,69,990 crore.