Ready to be 'Neelakantha', drink poison to clean system: RBI Guv

GANDHINAGAR: Expressing deep anguish over a spate of banking frauds, RBI Governor Urjit Patel stated on Wednesday that just like the 'Neelakantha', the central bank will consume poison and face brickbats, however will stick to endeavour to develop into higher with each and every trial.

Breaking silence over the Rs 12,967 crore scam at PNB, he stated: "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 here, he stated: "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."

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Patel stated RBI has in place asset high quality overview of banks and "we are doing all we can to break this unholy nexus".

Invoking mythology, he stated RBI has undertaken the cleaning up of the country's credit score tradition as the Mandara mount or the churning rod within the Amrit Manthan or the Samudra Manthan of the fashionable day Indian financial system.

Until the churn is complete and the nectar of balance safely secured for the country's long term, someone should consume the poison that emanates alongside the way in which, he stated.

"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 stated.

He also wanted that more promoters and banks, personally - or jointly via their trade our bodies, would reconsider being at the aspect 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 bent within the pronouncements publish revelation of the fraud that RBI supervision group should have caught it, Patel stated no banking regulator can catch or save you 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 stated.

Referring to PNB, Patel stated the RBI had identified, according to cyber possibility concerns, the exact supply of operational danger - during which "we understand" now the fraud had been perpetrated.

In explicit, he stated the RBI had issued exact instructions via three circulars in 2016 to permit banks to do away with the danger.

"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 stated.

Patel stated the RBI will adopt actions towards the bank that it is empowered to however this set is restricted beneath its Banking Regulation Act powers over PSBs.

Noting that "success has many fathers; failures none", the Governor stated there has been the standard blame game, passing the buck, and a tonne 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 stated.

Patel also flagged the problem of rising bad loans (NPA) pronouncing that the problems wishes rapid consideration.

"Its magnitude is larger than Rs 8.5 lakh crores of stressed assets on bank balancesheets and its significance stems from several practices in promoter-bank credit relationship that need immediate attention,".

The RBI has been clamping down at the failure to recognise asset high quality as non-performing as in keeping with its norms by way of requiring that banks, whose "divergence" exceeds by way of 15 in keeping with cent of the true non acting belongings (NPAs) as in keeping with the norms, expose the divergence.

This should repair some market discipline towards such practices, particularly in terms of non-public sector banks, Patel stated.
Ready to be 'Neelakantha', drink poison to clean system: RBI Guv Ready to be 'Neelakantha', drink poison to clean system: RBI Guv Reviewed by kailash soni on March 15, 2018 Rating: 5
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