 "BoB fraud not reflection of systemic problem: Sinha")
The finance ministry on Wednesday said the Rs 6,000-crore Bank of Baroda (BoB) black money remittance case was an isolated incident and not a reflection of any systemic problem in the banking sector. However, the ministry claimed efforts were being taken to close the gaps in the banking system.
Junior finance minister Jayant Sinha said, "We tried to understand whether this (BoB incident) represents any systemic lapses, whether there are gaps and processes that need to be closed; gaps in talents need to be closed. We have taken some action in those areas, but overall, there was a sense there is not anything systemic in our financial system and we need not be unnecessarily concerned."
Recently, the central police had conducted searches at 50 locations following the alleged illegal transfer of more than Rs 6,000 crore to Hong Kong in the garb of payments towards non-existent imports.
"One of the points was we need expertise in surveillance and analytical algorithm, and IBA (Indian Banks' Association) is working on that," Sinha added.
Besides, he said banks would follow benchmarking with standards set by the central bank and organisational restructuring wherever required.
Earlier this month, the CBI, Serious Fraud Investigation Office, tax authorities and the Enforcement Directorate had initiated probe into the BoB fraud.
The minister said there were always ways in which people try to subvert the system. On strengthening of governance in PSBs, he said the government wanted to ensure that banks followed best practices.
"We went through the issue of surveillance and control as well as oversight. All those matters were thoroughly discussed. There were several actionable items that were taken by IBA and in the next meeting will review them," he said.
PSBs told the minister and other finance ministry officials that the problem of poor asset quality "may continue" for another two-three quarters.
"The issue of poor asset quality was discussed. The banks clarified that the problem may continue for two to three quarters before their situation improves. Banks were advised to make judicious use of their capital," a ministry statement said.
Gross non-performing assets of state-run banks at the end of the March quarter stood at 5.2 per cent of total advances compared with 5.63 per cent in December.
The statement also said the banks were asked to give the progress on different subjects after the Indradhanush scheme was implemented. In August, the government had announced Indradhanush package for transforming PSBs through a bottoms-up approach. It represents the most comprehensive reform effort undertaken since banking nationalisation in 1970.
Junior finance minister Jayant Sinha said, "We tried to understand whether this (BoB incident) represents any systemic lapses, whether there are gaps and processes that need to be closed; gaps in talents need to be closed. We have taken some action in those areas, but overall, there was a sense there is not anything systemic in our financial system and we need not be unnecessarily concerned."
Recently, the central police had conducted searches at 50 locations following the alleged illegal transfer of more than Rs 6,000 crore to Hong Kong in the garb of payments towards non-existent imports.
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The minister on Wednesday met heads of public sector banks (PSBs). He said the meeting discussed a few points to prevent recurrence of such scams.
"One of the points was we need expertise in surveillance and analytical algorithm, and IBA (Indian Banks' Association) is working on that," Sinha added.
Besides, he said banks would follow benchmarking with standards set by the central bank and organisational restructuring wherever required.
Earlier this month, the CBI, Serious Fraud Investigation Office, tax authorities and the Enforcement Directorate had initiated probe into the BoB fraud.
The minister said there were always ways in which people try to subvert the system. On strengthening of governance in PSBs, he said the government wanted to ensure that banks followed best practices.
"We went through the issue of surveillance and control as well as oversight. All those matters were thoroughly discussed. There were several actionable items that were taken by IBA and in the next meeting will review them," he said.
PSBs told the minister and other finance ministry officials that the problem of poor asset quality "may continue" for another two-three quarters.
"The issue of poor asset quality was discussed. The banks clarified that the problem may continue for two to three quarters before their situation improves. Banks were advised to make judicious use of their capital," a ministry statement said.
Gross non-performing assets of state-run banks at the end of the March quarter stood at 5.2 per cent of total advances compared with 5.63 per cent in December.
The statement also said the banks were asked to give the progress on different subjects after the Indradhanush scheme was implemented. In August, the government had announced Indradhanush package for transforming PSBs through a bottoms-up approach. It represents the most comprehensive reform effort undertaken since banking nationalisation in 1970.