Banking

Plea seeks probe into role of RBI officials in bank scams

Read more at www.thehindu.com

BJP leader and MP Subramanian Swamy on Wednesday moved the Supreme Court seeking a Central Bureau of Investigation (CBI) probe into the role played by Reserve Bank of India (RBI) officials in various banking scams that plague the country’s economy, causing prejudice to public interest.

The petition, filed by Dr. Swamy and advocate Satya Sabharwal, said the alleged involvement of RBI officials in scams involving various entities, including Kingfisher, Bank of Maharashtra, an Uttar Pradesh-based private sugar organisation, Nirav Modi, Rotomac Global, Lakshmi Vilas Bank, IL&FS, PMC Bank, Yes Bank and First Leasing Company of India, had not been investigated.

The petition alleged that the RBI officials had acted in “demonstrable active connivance” in direct violation of statutes such as the Reserve Bank of India Act, Banking Regulation Act, State Bank of India Act, Banking Companies (Acquisition and Transfer of Undertakings) Act and the Nationalised Bank (Management and Miscellaneous Provisions) Scheme, 1980.

It said information procured through the Right to Information (RTI) Act revealed that “no officer of Reserve Bank of India has ever been held accountable for any dereliction of duty in case of any fraud reported by any bank. This is in sharp contrast to the number of frauds exploding in the banking sector in India aggregating to in excess of over ₹3 lakh crore”.

This lapse has occurred despite RBI retaining the power to monitor, regulate, supervise, audit and direct the functioning of banking companies in the country. “The scheme of the Banking Regulation Act makes the Reserve Bank of India the alter ego of the bank management, more so in case of public sector banks. Yet, in none of the high-profile banking scams, the Central Bureau of Investigation investigating these scams has not even sought to examine at a cursory the role of officials of RBI,” the petition said.

It said Chief Risk Officers in banks are to be appointed by the RBI, however they have been proved redundant.

Banks are required to keep the credit risk management function separate from the credit sanction process towards effective risk management. For bringing a uniform approach and alignment of risk management systems with the best practices, banks are also required to frame a Board-approved policy, clearly defining the roles and responsibilities of the Chief Risk Officer, who shall not have any reporting relationship with business verticals or business targets.

“However, these chief risk officers have miserably failed to perform their duties due to the demonstrable active connivance on the part of the RBI officials,” the petition said.

The RBI has failed to protect the interest of various stakeholders, the petition alleged.

You have reached your limit for free articles this month.

Subscription Benefits Include

Today’s Paper

Find mobile-friendly version of articles from the day’s newspaper in one easy-to-read list.

Unlimited Access

Enjoy reading as many articles as you wish without any limitations.

Personalised recommendations

A select list of articles that match your interests and tastes.

Faster pages

Move smoothly between articles as our pages load instantly.

Dashboard

A one-stop-shop for seeing the latest updates, and managing your preferences.

Briefing

We brief you on the latest and most important developments, three times a day.

Support Quality Journalism.

*Our Digital Subscription plans do not currently include the e-paper, crossword and print.

Read more at www.thehindu.com

Show More

Related Articles

Back to top button