Union Finance minister Nirmala Sitharaman on Thursday said that the Centre was open to bringing in necessary amendments to protect the banking system from malpractices. "If amendments are going to help us curb malpractices, help us in better regulating them, help us in better empowering the regulator itself—the RBI—we would like to do it... if necessary, in the forthcoming winter session of Parliament itself, we will be bringing in any regulation, any amendments, which may be necessitated," Sitharaman said in Mumbai on Thursday.
The finance minister also met the customers of PMC Bank who were protesting at the BJP office in Nariman Point in Mumbai during Sitharaman's visit on Thursday. Facing the angry protesters, she assured them of protection. Sitharaman was in the city for her scheduled interaction in the run-up to the Maharashtra assembly elections.
Addressing a press conference after the meeting, Sitharaman said that there need to be a better monitoring system for cooperative banks in the country. "I have asked the secretaries of the ministry to study in detail as to what is happening. Representatives of RBI will also be there to understand shortcomings, what happened, and also to therefore, if necessary, look at the ways in which the respective acts will have to be amended. The group which will look into this will have two secretaries of finance ministry. It will also have one deputy governor-level official from RBI at meeting, so that we take necessary legislative steps to prevent such things from happening in future and empower the regulator better," said Sitharaman. The minister said she will speak to RBI Governor Shaktikanta Das about the interest of the depositors and convey their urgency and distress.
She added that the finance ministry might have nothing to do with the PMC bank fraud directly because "the RBI is the regulator". "But from my side, I have asked the secretaries of my ministry to work with Rural Development Ministry and Urban Development Ministry to study in detail as to what is happening," FM said in Mumbai.
The PMC Bank was put under "directions" by the Reserve Bank of India (RBI) last month due to weak financial health, wherein the central bank has capped the deposit withdrawals at Rs 25,000.
PMC is in bad health allegedly due to its exposure to the near bankrupt realty player HDIL, to which it has loaned over 70 per cent of its Rs 9,000 crore in advances.
'Govt giving sector-specific solutions to fight slowdown'
On the prevailing economic conditions, Sitharaman said the government is giving sector-specific solutions to fight the slowdown. She, however, parried a specific question on whether the government accepts if the country is in the midst of an economic slowdown.
Hinting at other measures like steps to improve exports, easing credit, making more money available by early repayments to vendors and front-loading of banks recapitalisation, Sitharaman said the government has been working on sector-specific measures. "We are giving relief to all sectors who need help," Sitharaman said.
India's GDP expansion has slowed to a six-year low of five per cent for the June quarter. This has led to a rash of downward revisions in expectations, including from the RBI which now expects GDP growth to come down to 6.1 per cent in FY20.
(With PTI inputs)
