RBI to create Specialised Supervisory and Regulatory Cadre
The Reserve Bank of India has decided to create a specialised supervisory and regulatory cadre for strengthening the supervision and regulation of commercial banks, urban cooperative banks and Non-Banking Financial Companies.
Why the Specialised Cadre?
There were criticisms against the central bank that the RBI was lax in the supervisory functions, especially in timely detection of frauds and poor governance in the banking sector.
The reasons behind RBI undertaking overhaul of the supervisory structure are non-bank finance crisis, failures of credit rating agencies to flag risks, divergence in asset quality by big banks and alleged lapses on the part of auditors.
The decision has also gained significance in the backdrop of a series of events including the IL&FS defaults, ICICI Bank loan issue, Punjab National Bank fraud and the liquidity issues in the NBFC sector in the last two years.
