Last week, RBI Governor Urjit Patel, in the context of the fraud at Punjab National Bank (PNB) had stressed that the it does not have enough control over the state run banks as much as it have over private lenders.
The Banking Regulation Act, which regulates and supervises banking companies in the country does not fully apply to the State Bank of India (SBI) and other Public Sector Banks (PSBs), The Economic Times has reported citing a Reserve Bank of India (RBI) official.
On March 14, RBI Governor Urjit Patel, in the context of the fraud at Punjab National Bank (PNB) had stressed that the it does not have enough control over the state run banks as much as it have over private lenders.
The senior official told the newspaper, “Only certain provisions of that Act are made applicable to such banks through Section 51 of the Banking Regulation Act, 1949,” adding that separate items of legislation apply only to SBI, state-owned lenders and regional rural banks (RRBs), the person said.
The RBI does not have the powers to remove Chairpersons, Managing Directors, grant licences and impose conditions on PSBs. However, it can exercise those powers on private players.
The Reserve Bank does not approve appointment, reappointment or terminations and remuneration of the CMD and Directors of state-owned banks.RBI Governor Patel had said last week, “From the RBI’s standpoint, legislative changes to the BR Act that make our banking regulatory powers fully ownership neutral — not piecemeal, but fully — is a minimum requirement”.