Piyush Goyal, Coal and Power Minister of India (Source: PIB) 

Government Open To Discussing RBI’s Power Over State-Owned Banks, Says Goyal

Interim Finance Minister Piyush Goyal today said the government is open to discussing the issues raised by the Reserve Bank of India over the lack of powers in regulating state-run lenders.

Amidst criticism that the apex bank had failed in its regulatory oversight over government-owned banks following the Rs 13,500-crore Punjab National Bank scam, RBI Governor Urjit Patel had recently blamed it on the lack of powers to control them.

Also read: Why Urjit Patel Wants More Regulatory Powers Over State-Owned Banks

"The government is open to discussing with the RBI all the issues it has on regulating state-run banks," Goyal said at an industry event.

The minister also ruled out government paring its stake in public sector banks, saying there is no proposal with the government to lower its ownership in state-run banks to under 51 percent in 20 of them.

The statement comes amidst strong opposition from banking and LIC unions to the government plans to sell its majority stake in the crippled IDBI Bank to LIC.

Also read: LIC Gets Regulator’s Nod To Increase Stake In IDBI Bank Up To 51% 

Admitting that the banking system has failed the public in meeting their high expectations of them, Goyal said bankers have failed to live up to the high standards and ethics expected of them. He added that the government will back all the state-run banks with enough capital.

Admitting that PSBs had faced political interferences in the past, Goyal said but under this government no minister is interfering in the operational matters of the lenders.

A day after accepting the Sunil Mehta panel recommendation to set up an asset management company, that will function like a bad bank to resolve smaller loan defaults of up to Rs 500 crore, Goyal said liquidation can't be the panacea for all NPAs as there are genuine business failures which need to be resolved.

Also read: Government Unveils Five-Point Plan ‘Sashakt’ To Tackle Bad Loans