Page 9 - Banking Finance November 2021
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RBI CORNER

         RBI has also said that responsibilities  regulatory and legal status of the pri-  Bank, Kumar reveals how the private
         of the transferor with respect to con-  vate sector company that would re-  lender stepped in to help GVK attain
         tinuous reporting, monitoring, filing of  solve the sticky loans that the 'bad  financial closure for its Navi Mumbai
         complaints with law enforcement    bank' acquires.                    project. The Rana Kapoor-promoted
         agencies and proceedings related to  Under the unique twin-company    bank had charged a high upfront fee
         such complaints shall also be trans-  structure, National Asset Reconstruc-  even when SBI - which was several
         ferred to the ARC. "The transfer of  tion Company Ltd (NARCL) - the bad  times bigger and facing pressure from
         such loan exposures to an ARC, how-  bank in which the majority       various authorities - was reluctant
         ever, does not absolve the transferor                                 given the group's stressed situation.
                                            shareholding is with public sector
         from fixing the staff accountability as  banks - would buy bad loans from  He has also questioned the delay in
         required under the extant instructions  commercial banks, while India Debt  deciding on the reappointment of
         on frauds," RBI said.              Resolution Company Ltd (IDRCL),    Kapoor, which left the RBI with no

         "Due to forensic audit in all big NPAs,  where private sector institutions  choice but to offer a three-month ex-
         in last three years, advances amount-  would hold 51% equity, would focus on  tension up to January for Kapoor.
         ing Rs 3.83 lakh crore were declared  the resolution of the loans purchased.
         as fraud accounts. Now, This big   "Public sector banks want the RBI to  Shaktikanta Das reap-
         chunk of NPAs will be available for  'recognise' IDRCL. Since IDRCL will be pointed as RBI Governor
         sale to ARCs in general and specifi-  responsible for running complex resolu-
         cally to NARCL in case of large ad-  tion processes, it may come across le-  for three more years
         vances with consortium lending," Hari  gal challenges. These can be best  The government has reappointed
         Hara Mishra, director, UV ARC, said.  handled if the entity has a regulatory  Shaktikanta Das as the Reserve Bank
                                            recognition," a person familiar with  of India's (RBI) governor for three
         RBI fines two payment                                                 more years. The re-appointment is ef-
                                            the ongoing discussion between RBI
         system operators                   and banks he said. "However, RBI has  fective from December 10, or until
                                                                               further orders, whichever is earlier.
         The Reserve Bank of India has im-  certain reservations about this because
         posed monetary penalties on two pay-  existing regulations have no provisions  "The Appointments Committee of the
         ment system operators - Paytm Pay-  for such a structure," he said.   Cabinet has approved the reappoint-
         ments Bank Ltd (PPBL) and Western                                     ment of Shaktikanta Das as Reserve
         Union Financial Services (WUFSI) - as RBI should've acted on          Bank of India Governor for a period of
         deficiencies were found in regulatory  YES Bank 5 months earlier      three years beyond 10.12.2021 or un-
         compliance. The RBI imposed a Rs 1                                    til further orders, whichever is ear-
         crore monetary penalty on Paytm    Former State Bank of India chairman  lier," an official statement stated.
         Payments Bank for an offence com-  Rajnish Kumar has said in his book  Shaktikanta Das has vast experience in
         mitted under the Payment and Settle-  that the Reserve Bank of India should  various areas of governance and has
         ment Systems Act, 2007.            have sacked the Yes Bank board five  held important positions in the Central
                                            months earlier in November 2019 as
         Besides, the regulator has imposed a  the bank was already losing deposits  and State Governments in the areas of
         monetary penalty of over Rs. 27 lakh  and defaulting on reserve require-  Finance, Taxation, Industries, Infrastruc-
         on the WUFSI for non-compliance    ments.                             ture, etc. He is a postgraduate from
         with certain provisions of the direc-                                 St. Stephen's College, Delhi University.
         tions contained in the 'Master Direc-  In his book, 'The Custodian of Trust',  During his long tenure in the Ministry
         tion on Money Transfer Service     the former SBI chairman has provided  of Finance, Government of India, he
         Scheme' (MTSS Directions).         some behind-the-scenes glimpses of  was directly associated with the
                                            what went into resolving something  preparation of as many as 8 Union
         PSU banks seek RBI over-           that appeared as a Lehman Brothers  Budgets. Das has also served as
                                            moment for India. It was during his
         sight on IDRCL for smooth          tenure that the financial sector was  India's Alternate Governor in the
                                                                               World Bank, Asian Development Bank
         NPA resolution                     hit by the triple failure of IL&FS, DHFL  (ADB), New Development Bank (NDB)
         PSU lenders and the Reserve Bank of  and Yes Bank.                    and Asian Infrastructure Investment
         India (RBI) are trying to sort out the  Giving a hint of the workings of Yes  Bank (AIIB).

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