A parliamentary panel, chaired by Veerappa Moily, has clearly stated that the non-performing loans (NPLs) situation of banks is far from over.
With chances of restructured assets also failing in the next fiscal, the panel recently directed banks to make wilful defaulters names public.
Speaking to CNBC-TV18’s Ritupurna Bhuyan, Moily says that the NPL situation reflects efficiency of the governing body. "The RBI directors in the respective banks are absolutely inadequate," he adds.
Moily feels that RBI should not appoint its own nominees into management of banks as it is the regulator.
He further adds that the reporting system of appointing government and RBI nominees’ on bank’s boards is inadequate.
Below is the transcript of Veerappa Moily’s interview with CNBC-TV18's Rituparna Bhuyan.
Q: What is the biggest problem that is hampering the process?
A: This is a very serious issue and this reflects mainly on the governance part of the banks. Governance deficit ultimately reached to this non-performing asset (NPA). Apart from that Reserve Bank of India (RBI) is the regulator for the banks. But unfortunately even the government micro manages, is bad. That should not be. They have no business to put their own directors in the respective banks, RBI because they are being regulators.
They cannot be that objective in dealing with the matter and the reporting system with regard to the government nominee directors in the bank and also the RBI directors in the respective banks are absolutely inadequate. Rather I would say that they are not that they are not reflecting any accountability.
Q: Wilful defaulters, you have said that the names should be made public. Yesterday, in fact Punjab National Bank (PNB) has made the names public.
A: Yes, because what happens they say that this cannot be made public because of the restriction. If there is a limitation of the act then amend it. Ultimately it has to be known who are the wilful defaulters and because of them bank is critical.