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A parliamentary panel has expressed unhappiness and disappointment with Reserve Bank of India (RBI) and associated banks for the bad loans situation. The panel said that the way the two had managed the problem could have been better. 
 
The report was tabled in Parliament on Wednesday as the standing committee on finance rapped the central bank, saying that it "does not seem to have quite succeeded, as a regulator" in implementing and enforcing its guide lines on stressed loans while urging it to be more 'proactive'. 
 
The committee also called for a clear distinction to be made between "wilful defaulters" and other defaulters in the procedures, saying that "wilfully defaulting" promoters should be dealt with sternly and promptly. 
 
This has happened because in the quarter that ended in December 2015, many state-run banks declared a sharp rise in non-performing assets (NPAs), which forced them to set aside large sums of money so that they can cover potential losses. 
 
While some of them have said that they have seen a plunge in profits, some said that they are running in losses. 
 
"Bank balance sheets continue to remain under pressure and recent quarterly results of banks are a grim reminder of the situation tha banks find themselves in, with most of them reporting sharp dip in profits, with NPAs and provision for write offs ballooning," the Veerappa Moily headed committee said. It also added that NPAs can very well damage India's growth story. 
 
The committee rebuked the banks, saying that it should not have failed to notice the early signs of stress on the loans disbursed by them. 
"Mere issuing of guidelines by RBI does not seem to have yielded the desired results... As the committee would not like the RBI to be a passive regulator, when major lapses occur in banks, it would be in the fitness of things if RBI exercises its regulatory powers vis-a-vis banks to take punitive action in cases of default and to enforce their guidelines," it said. 
 
Talking to RBI, the committee said that it should have its regulatory role well delineated and thus not have its director in the board( s) of banks as part of their management, "as conflict of interest may lead to avoidable laxity". 
 
It also called for an enquiry into decisions taken to sanction loans that were passed after violating norms and said that appropriate penal action should be taken against the defaulters. 
 
<a href="http://media.salon.com/2015/06/india-economy.jpeg-1280x960.jpg">Image source</a>

Panel snubs RBI and state-run banks for grossly mismanaging the situations of mounting bad loans

<keyword id="64190" type="POSITION" weightage="20" keywordseo="RBI-Governor">RBI Governor</keyword> <keyword id="6358908" type="PERSON" weightage="100" keywordseo="Raghuram-Rajan">Raghuram Rajan</keyword> said three-year term for a central bank chief is short, calling for a longer term. 
 
While briefing Parliament's Standing Committee of Finance, Rajan said, “a three-year term is short. 
 On whether it should be five years, Rajan is believed to have cited the case of US <keyword id="6355253" type="ORGANIZATION" weightage="20" keywordseo="Federal-Reserve">Federal Reserve</keyword>. 
 
In the US Fed, in addition to serving as members of the Board, the Chairman and Vice-Chairman serve terms of four years and may be reappointed to those roles who in turn serve until their terms as Governors expire. 
 
Rajan, whose current three-year tenure ends on September 4, has already said no to a second term. 
 Sources further said that during the meeting that lasted for over three hours, the Governor briefed the panel, headed by senior Congress leader M <keyword id="6369803" type="PERSON" weightage="20" keywordseo="Veerappa-Moily">Veerappa Moily</keyword>, on state of the economy, reforms and restructuring of RBI, challenges in the banking sector in India and the way forward. 
 
The committee was apprised by Rajan of the various steps taken to deal with the bad loan problem, said the sources. 
 
The Reserve Bank has said the gross non-performing assets of the banks can rise to as high as 9.3 per cent in 2016-17 after hitting 7.6 per cent in March 2016. 
 
Rajan, the sources added, also briefed MPs about the credit scenario of the banks. He is believed to have told the MPs that private lenders are more active on the lending front, but PSU banks are found to be reluctant even when there is no shortage of funds. 
 The Governor also explained to MPs the impact of <keyword id="6355333" type="UNKNOWN" weightage="20" keywordseo="Brexit">Brexit</keyword> on India and the global economy. 
 
Earlier in the day, Rajan called on Finance Minister Arun Jaitley as the central bank and the government seek to quickly put in place a new interest rate-setting mechanism.

Raghuram Rajan pitches for longer tenure for RBI Governor, says three years is short

<keyword id="2224" type="PERSON" weightage="20" keywordseo="Congress-President-Sonia-Gandhi">Congress president Sonia Gandhi</keyword> has set up three separate committees for discussing policy issues related to economic affairs, foreign affairs and national security, with former prime minister Manmohan Singh part of all the three panels. While former finance minister P Chidambaram, and party leaders Mallikarjun Kharge and <keyword id="6385492" type="PERSON" weightage="20" keywordseo="Digvijaya-Singh">Digvijaya Singh</keyword> will be part of the economic affairs committee, Jairam Ramesh will be its convener. The committee on foreign affairs will have Anand Sharma, <keyword id="42749" type="COMPANY" weightage="20" keywordseo="Shashi-Tharoor">Shashi Tharoor</keyword>, Salman Khurshid and Saptagiri Ulaka. Khurshid will be the convener of the panel. The committee on national security will have leader of opposition in Rajya Sabha Ghulam Nabi Azad, party leaders Veerappa Moily, Vincent H Pala and V <keyword id="927122" type="PERSON" weightage="20" keywordseo="Vaithilingam">Vaithilingam</keyword>, with Pala as its convener. "The Congress president has constituted three committees to consider and discuss issues and policies related to the subjects of economic affairs, foreign affairs and national security," an official statement from AICC general secretary KC Venugopal said. Incidentally, among those nominated in the committees include senior party leaders Ghulam Nabi Azad, Anand Sharma, Veerappa Moily and Shashi Tharoor, who were part of the 23 letter-writers seeking an organisational overhaul of the Congress. While Sharma is the chairman of the AICC foreign affairs department, Shashi Tharoor heads the party's Professional Congress. SKC AAR

Sonia Gandhi sets up panel to discuss national security, economic and foreign affairs, Manmohan Singh to head all three panels

NEW DELHI: He was one of the 4,500 guests but Delhi CM <keyword id="260213" type="PERSON" weightage="100" keywordseo="Arvind-Kejriwal">Arvind Kejriwal</keyword>, in his maiden outing at President <keyword id="9937" type="COMPANY" weightage="40" keywordseo="Pranab">Pranab</keyword> Mukherjee’s ‘At Home’, stole the show. 
 
Wearing his trademark maroon sweater, muffler and floaters, Kejriwal stood in the sprawling Mughal Gardens as India’s swish set vied for autographs, pictures and sometimes just a handshake with him. 
 
It was a power moment that no one in the establishment may have imagined. Two years ago, Kejriwal had negotiated with Mukherjee, chairman of the joint drafting committee, on the Lokpal bill and had returned empty-handed. On Saturday, the two displayed a public difference of opinion. Mukherjee spoke against “populist anarchy” and Kejriwal defended his dharna as constitutional. On Sunday, as Mukherjee gave an audience to invitees from the world of diplomacy, politics, administration, arts and media, Kejriwal held a parallel durbar. 
 
Men and women showered him with unabashed praise. Several ambassadors and bureaucrats took the opportunity to introduce themselves to Kejriwal who was accompanied by his Cabinet. German ambassador Michael Steiner sought a meeting with Kejriwal for German President Joachim Gauck who is visiting India next month. The request, it emerges, was turned down by the CM’s office. Kejriwal assured him that it would be rescheduled. Another diplomat shared a joke, saying how his broken Hindi left him confused about the party’s name initially (he thought aam only meant mango). 
 The power elite gave up its pretensions, some offered him advice and encouragement, some said they were inspired and others sought his time. The CM even received a muffler as a present. The argumentative asked why he had sat in the VIP enclosure at the <keyword id="6416557" type="PERSON" weightage="100" keywordseo="Republic-day">Republic Day</keyword> parade or why his party’s name had no mention of the “aam aurat”. To them all, Kejriwal gave a patient ear. In fact, the <keyword id="6356115" type="CITY" weightage="40" keywordseo="AAP">AAP</keyword> durbar went on well after the President and the PM had left the venue till security personnel stepped in to guide Kejriwal to the exit. 
 
Mukherjee too was his accessible self, meeting people gathered in the Rashtrapati Bhavan lawns. Visiting Japanese PM Shinzo Abe also met the invitees. 
 Later, <keyword id="1575" type="ORGANIZATION" weightage="40" keywordseo="Congress">Congress</keyword> president Sonia Gandhi and BJP leader Sushma Swaraj got up from their chairs in the VIP enclosure and mixed with the crowd. 
 Other dignitaries present were Vice-President <keyword id="6491214" type="PERSON" weightage="40" keywordseo="Hamid-Ansari">Hamid Ansari</keyword>, Prime Minister Manmohan Singh, <keyword id="6355187" type="ORGANIZATION" weightage="40" keywordseo="Lok-Sabha">Lok Sabha</keyword> Speaker Meira Kumar, home minister Sushil Kumar Shinde, besides BJP leaders L K Advani and Arun Jaitley. Cabinet ministers P Chidambaram, Veerappa Moily and A K Antony were also present. 
 
Sources said close to 4,500 people had turned up. Rashtrapati Bhavan had issued e-invites this year and the entrances were manned by bar-code scanning personnel. About 60% of the invites were sent out through e-mail, bringing down costs and resources as part of Rashtrapati Bhavan’s greening exercise.

Republic Day: President Pranab Hosts The Show, Kejriwal Steals It

NEW DELHI: Parliament on Wednesday passed the crucial <keyword id="6356353" type="UNKNOWN" weightage="100" keywordseo="lokpal">Lokpal</keyword> Bill with the <keyword id="6355187" type="ORGANIZATION" weightage="40" keywordseo="Lok-Sabha">Lok Sabha</keyword> adopting the measure as amended by the Rajya Sabha after a short discussion. Following are the salient features of the amended Lokpal Bill. 
 
1. Lokayuktas: The new bill mandates states to set up Lokayuktas within 365 days. States have the freedom to determine the nature and type of Lokayukta. 
 
The old bill said the law shall be applicable to states only if they give consent to its application. 
 
The old bill gave power to the central government to appoint state Lokayuktas while the new draft gives this power to the states. 
 
2. Constitution of Lokpal: The Lokpal will consist of a chairperson and a maximum of eight members, of which fifty percent shall be judicial members. Fifty percent members of Lokpal shall be from among SC, ST, OBCs, minorities and women. 
 The older version said the chairperson shall be the <keyword id="42759" type="POSITION" weightage="40" keywordseo="Chief-Justice">Chief Justice</keyword> of India or a present or former <keyword id="18182" type="POSITION" weightage="40" keywordseo="Judge">judge</keyword> of the <keyword id="6354977" type="ORGANIZATION" weightage="40" keywordseo="Supreme-Court">Supreme Court</keyword> or a non-judicial member with specified qualifications (chief justice or a judge of a high court). 
 
3. Selection of Lokpal: The selection committee will have <keyword id="71" type="POSITION" weightage="40" keywordseo="Prime-Minister">Prime Minister</keyword>, Lok Sabha Speaker, leader of the opposition in Lok Sabha and the Chief Justice of India. A fifth member of the selection committee for selection of Lokpal under the category of "eminent jurist" may be nominated by the <keyword id="2540" type="POSITION" weightage="40" keywordseo="President">President</keyword> on the basis of recommendation of the first four members of the selection committee. 
 
In the old bill, selection of the fifth person was left entirely to the President. 
 
4. Religious bodies and trust: The new bill includes societies and trusts that collect public money, receive <keyword id="6357455" type="EVENT" weightage="40" keywordseo="Funding">funding</keyword> from foreign sources, and have an income level above a certain threshold, it excludes bodies creating endowments for or performing religious or charitable functions. 
 
The old bill expanded definition of public servant by bringing societies and trusts which receive donations from the public (over a specified annual income) and, organisations which receive foreign donations (over Rs 10 lakh a year) within the purview of the Lokpal. 
 
5. Prosecution: In the new version, before taking a decision on filing a chargesheet in a case upon consideration of the investigation report, the Lokpal may authorise its own prosecution wing or the concerned investigating agency to initiate prosecution in special courts. 
 
Under the old bill, prosecution of the case could be done only by the prosecution wing of the Lokpal. 
 
6. Central Bureau of Investigation: For independence of the CBI, in the new bill a directorate of prosecution will be formed. Appointment of the director of prosecution will be on the recommendation of the <keyword id="403158" type="POSITION" weightage="40" keywordseo="Central-Vigilance-Commissioner">Central Vigilance Commissioner</keyword>. 
 
Transfer of officers of CBI investigating cases referred by Lokpal will be only with the approval of Lokpal who will also have superintendence over CBI in relation to Lokpal referred cases. 
 
7. Hearing: The new bill says a government servant will get a hearing before a decision is taken by the Lokpal. 
 
8. Prime Minister: The Prime Minister will be under the purview of the Lokpal with subject matter exclusions and specific process for handling complaints against the Prime Minister. 
 
9. Investigation: Inquiry has to be completed within 60 days and investigation to be completed within six months. Lokpal shall order an investigation only after hearing the public servant. 
 
Inquiry against the prime minister has to be held in-camera and approved by two-thirds of the full bench of the Lokpal. 
 
10. Penalty: False and frivolous complaints - imprisonment up to one year and a fine of up to Rs.1 lakh. Public servants - imprisonment up to seven years. Criminal misconduct and habitually abetting corruption - jail term up to 10 years. 
 
 
Lokpal’s journey to transparency 
 
1966 
 <keyword id="238033" type="PERSON" weightage="40" keywordseo="Morarji-Desai">Morarji Desai</keyword> led First Administrative Reforms Commission recommends setting up of Lokpal at Centre and Lokayukta in states to look into complaints against public functionaries, including MPs 
 
1968-2001 
 
Successive governments introduce Lokpal bill eight times 
 
2002 
 
Justice MN Venkatachaliah led Constitution Review Commission stresses the need for Lokpal and Lokayuktas 
 
2004 
 
UPA-I's national common minimum programme promises that Lokpal bill would be enacted 
 
2005 
 
Veerappa Moily led Second Administrative Reforms Commission reiterates that Lokpal be established without delay 
 
2011 
 Jan: UPA-II's GoM headed by <keyword id="6359124" type="PERSON" weightage="40" keywordseo="Pranab-Mukherjee">Pranab Mukherjee</keyword> suggests a range of anti-corruption measures, including the Lokpal bill 
 Apr 5: <keyword id="57766" type="PERSON" weightage="40" keywordseo="Anna-Hazare">Anna Hazare</keyword> begins his first fast at Jantar Mantar demanding enactment of <keyword id="541695" type="UNKNOWN" weightage="40" keywordseo="Jan-Lokpal-Bill">Jan Lokpal bill</keyword> drafted by his team 
 
Apr 9: Anna ends fast as the government forms a joint drafting committee consisting of ministers and civil society members 
 
Jun 21: The last meeting of the drafting committee ends with the two sides coming up with separate drafts 
 
Aug 4: Govt introduces a Lokpal bill, widely attacked as fl awed 
 
Aug 8: Bill referred to standing committee 
 
Aug 16: Anna launches second fast for Jan Lokpal bill 
 
Dec 22: Govt re-introduces Lokpal and Lokayuktas bill 
 
Dec 27: Lok Sabha passes bill 
 
Dec 29: Introduced in Rajya Sabha 
 
2012 
 
Re-introduced in Rajya Sabha. Referred to select committee 
 
2013 
 
Dec 10: Anna Hazare begins fast in his village in Maharashtra, demanding urgent introduction of a new anti-corruption law 
 
Dec 13: Amended bill tabled in Rajya Sabha 
 
Dec 18: Lok Sabha passes the ammended bill. Anna Hazare breaks his fast. 
 
(With inputs from IANS)

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Panel snubs RBI and state-run banks for grossly mismanaging the situations of mounting bad loans

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