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Last Updated : Oct 14 1999 | 12:00 AM IST

The Reserve Bank of India (RBI) is tightening regulatory and supervisory

control over development financial institutions (DFIs), and has set up

an internal committee to study and recommend new powers required by the

central bank.

The committee is likely to recommend an RBI panel of auditors for the

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DFIs, similar to the one existing for commercial banks. Besides, the

committee may recommend more powers to the RBI to regulate the

appointment of directors on the boards of the institutions, sources

said.

A source said, "The RBI is planning to tighten supervisory and

regulatory control over FIs. An internal committee has been set up to

study new powers to be transferred to the RBI. They are working out how

some of the regulations in the Banking Regulation Act could be made

applicable to FIs."

"At the moment, the FIs can appoint their own auditors. They have

freedom to appoint auditors and replace them whenever they choose. RBI

is considering its own panel of auditors for FIs, the same way for

commercial banks. This is one of the most crucial powers that may be

transferred to it. But the committee is working on this," the source

said. Audit of commercial banks is done by chartered accountant firms

appointed by the RBI. Sources said the new supervisory powers were

necessary for closer scrutiny of FIs' functioning, particularly as they

chart their course to becoming universal banks.

"The FIs are moving towards universal banking as they have already

started dealing in short-term loans and deposits. Similar

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First Published: Oct 14 1999 | 12:00 AM IST

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