Ahead of Reserve Bank of India (RBI) Governor Urjit Patel’s scheduled appearance before the Standing Committee on Finance (SCF) on May 25, the panel headed by Veerappa Moily held discussions about financial sector issues, including demonetisation, with top public sector banks (PSBs) and insurance companies in Mumbai.
“We discussed financial sector issues with them. Issues like demonetisation and bank services charges also came up,” a senior member of the panel told The Indian Express. “Today, we met SBI (State Bank of India) chairman Arundhati Bhattacharya and her colleagues and, thereafter, we met LIC (Life Insurance Corporation of India) chairman and (its) MDs,” he said.
“We also met the Union Bank of India chairman. Yesterday (on Friday), we discussed general insurance issues with insurance companies,” he said.
Banking sector issues and reforms are important for the country. Two general insurance companies — GIC Re and New India Assurance — are getting ready to go public and list their shares on the exchanges. Panel members raised questions about the hike in service charges after demonetisation. Bank unions and non-government organisations also submitted memorandum to Moily against the hike in service charges. Banks had jacked up service charges, including ATM cash withdrawal charges, after demonetisation.
On the discussions with financial sector chiefs, the panel member said: “This is to gather information and evidence. Then we will formulate reports. We have few subjects before us… banking reforms, tax-GDP ratio and also revenue generation. We also discussed reforms in life and general insurance sectors. The overall focus is on reforms in financial sector.”
The panel also sought information on the revenue generation in Maharashtra, the largest contributor to the tax kitty. “In Pune, we met Maharashtra income tax commissioner, others from the department in Pune and Nagpur and Director General Enforcement,” the member said.
The panel had asked RBI Governor Urjit Patel to appear before it again on May 25 over demonetisation issue. Patel was spared a grilling when he had appeared before the SCF in January this year after former Prime Minister Manmohan Singh, who himself was the RBI governor once, intervened to say that the RBI as an institution should be respected and Patel should not be put “odd questions”.
Six months after the withdrawal of the legal tender status of Rs 500 and Rs 1,000 notes by the RBI, the full picture on currency withdrawal is not available even now as the RBI is yet to release data on demonetised money that has come back into the banking system. Bank deposit rates have fallen under the force of excess liquidity in the system while banks have lowered their lending rates in a bid to make borrowing easier. However, bank credit growth is still to pick up.