RBI's powers over PSBs: What's the truth? - II

RBI must now explain why and how it has allowed bad loans to boom to Rs 10 trillion

In my piece two weeks ago, I went into each of the legal provisions which, according to the Reserve Bank of India (RBI) governor, supposedly prevented the RBI from acting against public sector banks (PSBs), and showed how those sections did not discriminate between PSBs and private banks. In this piece, I look at what the real powers of the RBI are. For starters, let me refer to the RBI’s own document Report of the Working Group on Resolution Regime for Financial Institutions of May 2014. In chapter 3, the RBI report states, “RBI is vested with the power to