New Delhi: A parliamentary panel will grill finance ministry officials on April 17 amid rising NPAs, incidents of fraud and governance lapses in the banking sector. The Standing Committee on Finance, chaired by senior Congress leader M Veerappa Moily, had last met on March 9 in the aftermath of the over Rs 13,000 crore fraud in Punjab National Bank.
It had then asked the ministry to institute a comprehensive enquiry encompassing systemic elements in the case and submit its report within a month. “The Standing Committee is scheduled to meet finance ministry officials on April 17 and challenges in the banking sector, including NPAs and stressed assets, would be discussed,” an official said.
As per RBI’s Financial Stability Report, gross non-performing asset (NPA) ratio of public sector banks was at 13.5 per cent at the end of September, 2017, 1 percentage points higher than six months ago. The government had in February announced a Rs 2.11 lakh crore recapitalisation plan for PSU banks to revive the banking sector.
The meeting assumes significance since the sector is dealing with governance issues also at two private sector banks — ICICI and Axis. S&P Global Ratings had earlier in the day said that the recent issues in private sector banks reiterate the need to improve risk management, and maintain strong governance practices.
Chanda Kochhar, the managing director and CEO of the country’s leading private sector lender ICICI Bank, is currently under investigation for an alleged conflict of interest associated with the bank’s loan to the Videocon group in 2012.
Recently, the board of private sector lender Axis Bank has sought RBI nod for the reappointment of managing director and CEO Shikha Sharma for six months ending December 31, 2018. This is after the central bank declined an earlier proposal to give her a three-year term ending June 30, 2021.
According to reports, the RBI’s unwillingness to approve the initial request of three years was due to a number of risk management and governance issues that have emerged at the bank over the past year or so. These include a deterioration in asset quality and underreporting of nonperforming loans, S&P said.
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Source: News18