A few months back, RBI Governor Urjit Patel had highlighted the limited powers that the central bank enjoys over the PSBs. Now former RBI governor YV Reddy also backed him. Reddy also said the Narasimhan committee in the 1990s had suggested putting an end to dual control, but it was not implemented.
Former RBI governor YV Reddy backed current governor Urjit Patel and said the RBI does not exert control over the country's debt-laden public sector banks.
The government had committed to the handover of governance of PSBs to the RBI as recommended by the Narasimhan Committee, but had not completed the process, he said.
While the Prevention Of Corruption Act has been amended, the government would need to close all frivolous cases so as to allow the CBI to focus on the more serious offences, Reddy added.
The PSBs, which are currently constituted under an Act of the parliament, must be reorganised under the Companies Act to allow the government the flexibility to buy and sell stakes, he further added.