House panel quizzes FinMin officials on cash crunch in ATMs

The issue of the cash crunch in the bank ATMs resonated in a parliamentary panel on Tuesday with certain members in the Standing Committee on Finance asking the officials of the finance ministry whether the current crunch signalled to a come back of demonetisation days.

As Financial Services Secretary Rajiv Kumar and five other top ministry officials appeared before the Standing Committee on Finance headed by senior Congress leader M Veerappa Moily, a number of members raised queries related to the recent irregularities in the banking sector with a special focus on jewellery designer Nirav Modi and Mehul Choksi scam.

“Has demonetisation come back,” panel member and Trinamool Congress leader Dinesh Trivedi posed the question to Kumar. The members in the panel also quizzed the officials on the purpose of the government recapitalising banks with the taxpayers' money and losing it away to several businessmen who flee the country after indulging in frauds.

The panel also called Reserve Bank Governor Urjit Patel on May 17 to answer queries on a spate of banking scams unearthed in the last few months and mounting bad loans in the system.

Several other frauds have also come to light in the past couple of months. Certain private lenders, including ICICI Bank and Axis Bank, were too in the news for wrong reasons.

Members of the panel did not rule out nepotism and conflict of interest in the ICICI loan issue. They also sought to know from the RBI how such a thing could happen under its nose and what was the procedure of the Central bank's monitoring mechanism.

Issues related to cybercrime and online fraud also came up for discussion and the members suggested that the government innovate on ways of doing banking and move on from traditional banking practices.

"The committee has invited the RBI Governor on May 17. The members will be asking him about the scams and other banking regulations," a source said.

Former Prime Minister Manmohan Singh, who is a member of the committee, also attended the meeting.

The RBI governor had recently said that the central bank did not have adequate powers to deal with public sector banks. "The panel would like to know what kind of powers the RBI governor needs," a source said, adding that regulation is an important part and that is why the governor has been called.

The finance ministry officials gave part replies to queries of the lawmakers and they have been given three weeks time to file a complete report on their questions.