PAC questions Urjit Patel on NPAs of state-run banks, delay in setting up of PDMA

This was the first appearance of Patel before any Parliamentary panel after he took over as RBI head.

By: Express News Service | New Delhi | Published: September 9, 2016 2:17:39 am
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Reserve Bank Governor Urjit Patel faced questions over issues like non-passing of benefits of repo rate cut to consumers by banks, delay in setting up of the Public Debt Management Agency (PDMA) and rising non-performing asset (NPAs) in public sector banks (PSBs), as he appeared before the Public Accounts Committee on Thursday.

This was the first appearance of Patel before any Parliamentary panel after he took over as RBI head. Patel, according to sources, told the panel that RBI does not so much control the credit and lending aspects of banks and its role is to regulate their financial health when asked why the benefits of RBI’s cut in repo rate are not passed on to consumers.

Responding to it, BJP MP Nishikant Dubey told him that even the financial health of PSBs is not good as their NPAs are on a rise. BJP MP Ajay Sancheti also asked if the RBI has powers to intervene as a regulator or not if the banks do not abide by its rules.

The panel also sought a written reply from the RBI Governor on the issues concerning Public Debt Management.

Patel said that while the public sector banks cannot create hindrances in infrastructure and development projects, it should ensure proper scrutiny of the implementation of the projects they are funding, sources said.

Patel also agreed that the PSU banks should be “liberal with the small and medium traders as well as farmers” as suggested by the committee, sources said. The PAC told Patel that the debt management should be more “coordinated and effective.”

The panel also met Economic Affairs Secretary Shaktikanta Das. Members asked Das if PSBs follow RBI regulations and if they are autonomous. Members also sought the rationale behind government’s Rs 1.75 lakh crore capital infusion in public banks.

The Committee said that when the banks provide funds for corporate bodies, scrutinising and monitoring should not be limited to the granting stage but at the implementation of the projects too.

Patel, according to sources, told the PAC that the RBI is going to introduce that process soon in the PSUs. “But we need to see the development and infrastructure projects go on without any hindrance,” he said.

PAC chairman KV Thomas also flagged the poor participation of medium and small investors in the primary market for government securities and said that the ministry should examine the present position and ensure that the participation is augmented to the desired level.

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