Put RBI under Prompt Corrective Action for Effective Sectoral Control, Says AIBEA Leader Venkatachalam
Venkatachari Jagannathan (IANS) 30 September 2020
With bank after bank in the private sector getting into problems, the latest being the Lakshmi Vilas Bank (LVB), the efficacy of Reserve Bank of India (RBI) as the sectoral regulator will soon be a question mark, said a top leader of a large bank union.
"The way things are coming out in private sector banks, RBI is not able to control or unwittingly becomes a party to it, its efficacy will soon be a question mark," CH Venkatachalam, general secretary, All India Bank Employees' Association (AIBEA) told IANS.
"It is time the central government thinks of putting RBI under Prompt Corrective Action to really make an effective tool to control Banks," he added.
Citing the happenings in the 93-year old LVB, Mr Venkatachalam said its bad loans leapt from just about 2% in 2017 to 25% in 2020.
"The fact that the Bank was going in the wrong way could be visible even to a layman. How all these things and deteriorating health of the Bank was not seriously taken note of by RBI and its nominee Director," Mr Venkatachalam wondered.
He said, the RBI has access to everything going on in every bank and under its very nose, many things are happening in many banks.
"Not long ago, one RBI nominee director used to raise questions on the happenings in the bank. But later the RBI nominee directors remained silent," R Subramanian, former general secretary of the Lakshmi Vilas Bank Officers' Association and who retired from the Bank as senior manager told IANS.
He has moved the Madras High Court to direct the Central government, RBI and the Securities and Exchange Board of India (SEBI) to suspend LVB's board and appoint an administrator.
"Strangely, the nominees of the RBI on the LVB Board have not raised any concern or red flag despite the happenings in the Bank," Mr Subramanian, 67, told IANS.
In his petition, Mr Subramanian, who was the general secretary of the Lakshmi Vilas Bank Officers' Association, and retired from the Bank in 2013 as a senior manager, said that he had sent a representation to the Centre, and the RBI, "bringing to their notice the mismanagement and misleading disclosures to the general public for taking appropriate action but these have not been considered."
He contended that the mismanagement has resulted in gross non-performing assets (NPA) leaping from 2.67% in 2017 to 15.30% in 2019 and stretching to 25.39% in March 2020.
"Any such increase in gross NPA could not be justified as a common occurrence in the banking industry. This evidences quick mortality of advances and the options of the bank made against the guidelines of the RBI and the SEBI," Mr Subramanian argued.
"I submit that the total deposits in the respondent bank, as on 31 March 2020, are Rs21,443 crore. But there is no safety for the deposits made by general public as per the information available in the public domain and qualified statements of the statutory auditors of the bank in the balance sheet," he said.
Mr Subramanian said the unions have brought the happenings in the bank to RBI earlier, but nothing happened.
In his petition Mr Subramanian said the loss to the bank is due to bad advances extended Religare, Star agri, products, Talwalker,ACox and Kings, Coffee Day amounting to about Rs1,200 crore violating corporate governance.
LVB had extended big advances to Religare, Jet Airways Group, Cox and Kings, Nirav Modi Group, Coffee Day (relate to the questionable agri loans extended violating the established norms and RBI guidelines) and others to the tune of about Rs2,000 crore, he said.
Mr Subramanian also said in his petition that the Bank did not curtail its expenditure.
"RBI did not know how Nirav Modi could play with the Banks.A RBI did not know how Vijay Mallya was playing with the banks. RBI did not know the affairs of YES Bank. RBI did not notice anything wrong when Dhanlaxmi Bank was not doing well.A RBI did not notice anything wrong when Global Trust Bank was doing so many unscrupulous things and which were brought to their notice by RBI auditors themselves," Mr Venkatachalam said.
"In the same way, RBI does not appear to be knowing what is happening in LVB. If they really did not know what was happening in all these Banks, then it is not the RBI it was meant to be. If they knew all these things and still did not take drastic and timely steps, then RBI has no meaning," Mr Venkatachalam added.
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Meenal Mamdani
8 months ago
It is obvious for some time to even casual observers like myself that RBI does not have the capability to monitor and correct all that is going wrong in the banking sector.

RBI was formed at a time when the Indian banking system was young, very small and finding its feet. The earlier RBI directors did the best they could but it clearly was not enough.

Unfortunately things came to a boil during the tenure of a govt led by a man who did not believe in asking for or taking advice from experts but rather wanted to trust his own "gut instincts". When that went wrong, he did not have the courage to admit his mistakes. He is now trying to put his yes-men/women in important positions who will automatically say "Jee Huzoor" to his diktats.

India deserves better than this.
8 months ago
Replied to ssbh.dceo comment 8 months ago
World Bank can't do anything in internal affairs of India & its economy.
8 months ago
1. The LVB & DLB episodes speak of tip of iceberg looming in Indian Banking Industry.
2. The true allegations of GS, AIBEA, & LVB FUNCTIONARIES deserve immediate attention of RBI.
3. The UFM is a novice to Economy & the functionaries in DFS[UFM], IBA are Duds of Adhocism.
[i]. Smt.Nirmala Sitharaman, UFM is too busy to reply former PM, the genius PM, DR.Manmohan Singh & depended upon her bureaucracy. Affixed her signature, being novice to Indian Economy, IS A NATURAL BLUNDER. Her talent can be ushered in other Ministries. Piyush Goel Jee with CA back-ground, did well as interim FM in the absence of Arun Jaitley Jee.
[ii]. In order to goad the outdated, demented Duds of Adhocism, PMO/UFM can be filled –up with young + committed blood. Infusing Ms.Amrapali, IAS, former Dist. Collector/ Magistrate in Warangal [TS] at the instance of G.KishanReddy Jee, UHM of State, GOI; it is a right step.
4. https://www.youtube.com/watch?v=4Si8U02s8cQ.
8 months ago
Dear Mr #SABobde the Chief Justice of India, Why Not Order the #TotallyCorrupted RBI Governor Mr #ShaktikantaDas and his Deputy Governors to be Publicly Hanged at the Entrance of Supreme Court of India for Continuing Rampant Corruption in the Banks of India? I am Babubhai Vaghela from Ahmedabad. Thanks.....
Replied to s5rwav comment 8 months ago
GM Babubhai Vaghale Ji! If your extempore reaction is implemented, it leads to chaos. Please, share your reaction on FB,Twitter & linked.in for PMO to act properly.
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