NEW DELHI: RBI governor Urjit Patel’s failure to attend a scheduled meeting with Parliamentary Standing Committee on Finance on Thursday has raised several eyebrows.
Patel was summoned to appear before the Standing Committee on Finance headed by senior Congress leader M Veerappa Moily on May 17, but he skipped the meeting, citing a prior appointment. The meeting is now postponed for June 12.
“It was an important meeting. The date was given a month in advance. So it was surprising when the governor said he had some prior appointment,” said one of the members of the Standing Committee.
According to the member, Patel has neither confirmed his attendance for the June 12 meeting, nor has his office informed the Standing Committee of any other dates.
The meeting on May 17 was scheduled to discuss the rising Non-Performing Assets (NPA) in the banking sector, the revised RBI norms under its guidelines titled ‘Resolution of Stressed Assets-Revised Framework’ issued in February, and the rampant cases of fraud in public sector banks.
The NPA of banks have gone up substantially, reaching Rs 9.5 lakh crore as per the latest update. The number is expected to go up further, especially after the Central bank withdrew half a dozen loan-restructuring schemes and tightened some rules in February in its revised guidelines.
So far, 11 banks are put under prompt corrective action with a combined loss of Rs 43,026 crore this year, which experts fear will go up further as many banks, including the largest public sector bank SBI, is yet to announce their results.
In this context, the Standing Committee member said, the May 17 meeting was important. The panel will now seek a written response from the RBI on the rising NPAs, he said.
Meanwhile, this is not the first meeting that the RBI governor has skipped. Earlier this month, the Power Ministry had approached the RBI seeking relaxation of the revised RBI norms, pointing out it will adversely affect the power sector.
The meeting of Power Ministry officials with the Central bank was postponed, with no reason being cited, nor another date being provided. It was then the Power Ministry requested the PMO to intervene.
Even Indian Banks’ Association, which wanted to meet Patel on the power sector NPA issue, was not given an appointment.
According to various sources, one of the reasons is the increasing pressure on the RBI to relax the NPA norms, which it is reluctant to do.
According to Finance Ministry officials, even the ministry’s interaction with the RBI governor is “very formal”, limited to written communication. Historically, relationship between the Finance Ministry and the Central bank had never been smooth. However, Patel enjoyed a rather good relation with the north block even during demonetisation. But when the Nirav Modi fraud surfaced, all the guns were trained suddenly on the RBI governor, who in turn said the RBI has not “enough” power.