Rajeev Chandrasekhar's official website - Member of Parliament

GOVERNMENT OF INDIA

MINISTRY OF FINANCE

DEPARTMENT OF FINANCIAL SERVICES

RAJYA SABHA

UNSTARRED QUESTION NO. 867

TO BE ANSWERED ON THE 18TH DECEMBER 2018/ AGRAHAYANA 27, 1940 (SAKA)

Role of the Department of Financial Services and RBI vis-à-vis performance of PSBs

 

  1. SHRI RAJEEV CHANDRASEKHAR:

Will the Minister of FINANCE be pleased to state:

  • (a) the role of the Department of Financial Services of the Ministry and the RBI vis-a-vis the performance of lack of it in Public Sector Banks; and

 

  • (b) who is ultimately responsible to the stakeholders that is the tax paying citizen of India?

 

ANSWER

Minister of State in the Ministry of Finance

(SHRI SHIV PRATAP SHUKLA)

 

(a): Performance of banks is reflected in their annual financial statements. As per existing mechanism, under various applicable laws, all banks including Public Sector Banks (PSBs) are required to have their annual financial statements approved by their Board of Directors, disclose the same to stock exchanges, furnish copy thereof to the Reserve Bank of India (RBI), and present these at the annual general meeting of their shareholders for approval and adoption after discussion. As part of this, the bank’s Board and shareholders discuss and review the bank’s performance and, in addition, markets and the regulator also take note of the performance. This is in line with practice in other countries as well.

RBI is the regulator and supervisor of the banking system, as per powers conferred by relevant provisions of the Banking Regulation Act, 1949, the Reserve Bank of India Act, 1934, and other relevant statutes, and undertakes prudent regulation and supervision for the safety, soundness and systemic stability of the banking system.

Government initiates legislation for strengthening of the financial ecosystem and administrative strengthening of key institutions, besides supporting Public Sector Banks (PSBs) in terms of capital to supplement their efforts at generating capital and instituting reforms for responsive and responsible banking. As part of this, Government has initiated legislation for the Insolvency and Bankruptcy Code, amendments to the Banking Regulation Act and recovery related laws for strengthening the recovery ecosystem, and the Fugitive Economic Offenders Act, besides establishing Banks Board Bureau for top-level appointments at arms length and strengthening Debts Recovery Tribunals and Debts Recovery Appellate Tribunals. Further, for improving PSBs, Government has followed a comprehensive approach of recognition of stressed assets as NPAs, resolution of NPAs, recapitalisation of Public Sector Banks (PSBs), and reforms to strengthen banks.

(b): Bank managements are responsible to the regulator-cum-supervisor, shareholders and other stakeholders.

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