Letter to BS:How poor coordination between MoF, RBI creates banking chaos

Ongoing coordination in the perception of problems and finding solutions among the three is the only remedy for avoiding repetition of the present chaos

This refers to the report “RBI needs more powers to oversee PSBs” (June 13). Media reports would give an impression that the constraints in disciplining Public Sector Banks (PSBs) are the invention of the present Reserve Bank of India (RBI) Governor Urjit Patel. Those who are new to the subject may access the report of the “Committee on the Financial System” (CFS: First Narasimham Committee, 1991) that has made several recommendations about management of PSBs including handling of stressed assets.

Since late 1990’s, the Ministry of Finance (MoF) perfected the art of silencing the RBI and went ahead with its agenda