PSU Bank scam a loot of the country's future: RBI Governor

The Reserve Bank of India governor Urjit Patel on Wednesday dubbed the multi-crore mega bank fraud on state-owned banks by Nirav Modi and Mehul Choksi to be a "loot of the countrys future". "In plain simple English, these practices amount to a looting of our countrys future by some in the business community, in cahoots with some lenders...I speak today to highlight some fundamental fissures that exist in the regulation of banks, in particular, public sector banks (PSBs)," Urjit Patel said, adding that RBI too felt anger, hurt and pain at the banking sector frauds and irregularities.

He, however, said that it was not possible for any regulator to pre-empt or stop all the frauds or irregularities in the system. Patel said this while delivering a lecture on Banking Regulatory Powers Should Be Ownership Neutral at Centre for Law & Economics, Centre for Banking & Financial Laws, Gujarat National Law University in Gandhinagar. Seeking greater autonomy in regulating state-owned banks, the banking regulator hinted at fundamental fissures that exist in the regulations of the banks, primarily due to dual control over PSBs.

The RBI regulates all commercial banks under the Banking Regulation (BR) Act, 1949, but additionally, all public sector banks (PSBs) are regulated by the government of India under the banking companies (Acquisition and Transfer of Undertakings) Act, 1970, the Bank N...

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