RBI must monitor banks with off-site surveillance, on-site inspection: Union
Reserve Bank union today requested Governor Urjit Patel to monitor banks through a combination of risk-based supervision, off-site surveillance and on-site inspections of operational systems. The union suggested that the RBI should undertake random supervision of bank branches in all parts of the country periodically, possibly 10% of bank branches comprising all regions on an annual basis.
Here is an excerpt from the letter
"We would request you that RBI monitoring of banks should be a triad- a combination of risk-based supervision, off-site surveillance and random on-site inspections of operational systems, which, we feel, will give the best result," the union said in the letter.
Union suggests training new tech-savvy recruits to assist monitoring
"We strongly feel that RBI must remain in the scene, not only as an off-site surveyor but an active and alert inspector," the letter added. The letter said that the RBI could train newly recruited computer-savvy assistants in banks for assisting this monitoring exercise, which will stand the bank in good stead without stretching its human resources too much.
Patel faced criticism earlier on bank frauds, cash crunch
Earlier this week, Patel had appeared before a Parliamentary Panel, where he faced tough questions on bank frauds and cash crunch, among others. Patel assured the committee members, headed by senior Congress-leader Veerappa Moily, that steps were being taken to strengthen the banking system.
Union shows displeasure over Patel's statement on inspecting all branches
"You (Patel) have stressed that it is not possible for RBI to inspect/audit about 120,000 branches of banks spread over the whole country. That is unexceptionable," the union wrote. The Union added that this should not mean that RBI totally withdraws itself from on-site supervision and relies on reports sent by the banks taking those as "sacrosanct".
Union thanks Patel for bringing regulatory impediments
"If RBI believes that banking-authorities are responsible enough to mind their responsibilities, and RBI can safely rely on them then that will be definitely dereliction of duty," the union said. The union also thanked Patel for bringing to the fore regulatory impediments that the RBI is suffering from. It praised him for putting forward that banking regulation and supervision should be "ownership neutral".
