‘No bank regulator can catch all frauds’
Not possible to be in every nook and cranny of banking activity, says RBI Governor Urjit Patel
Amid criticism from several quarters, including the government, for failing to prevent banking frauds in the light of the recent Punjab National Bank scam, Reserve Bank of India Governor Urjit Patel said that no banking regulator can catch or prevent all banking frauds.
Problems faced by RBI
- Banking regulatory powers in India were not ownership neutral.
- The RBI did not have the power to supersede public sector bank boards as they were not registered under the Companies Act like private sector banks.
- RBI can neither remove any directors of public sector banks nor liquidate a government-owned bank.
Failure of the BR Act
BR Act exemptions for PSBs mean that the one agency – the regulatory – that can respond relatively quickly against banking frauds or irregularities cannot take effective action.
