Congress's Manish Tewari calls for RBI reforms, segregation of functions

Raising question mark on the ability of the RBI to deal with financial sector scams, Congress member Manish Tewari on Wednesday suggested reforms in the central bank which should include segregation of its various functions to enable it to discharge regulatory functions properly.

Raising question mark on the ability of the RBI to deal with financial sector scams, Congress member Manish Tewari on Wednesday suggested reforms in the central bank which should include segregation of its various functions to enable it to discharge regulatory functions properly. Participating in the discussion on the Banking Regulation (Amendment) Bill in the Lok Sabha, Tewari said RBI's track record of "preempting malfeasance" or scams in the banking sector is "very mixed", in view of what had happened in Yes Bank, Punjab and Maharshtra Coperative Bank, IL&FS and Dewan Housing.

"If there is a need to bring about substantive reform, the need is to unscramble this egg called Reserve Bank of India and segregate its various functions by spinning them off into different instrumentalities so that the primary function of the Reserve Bank of India, that is the regulator of the Indian banking system, can be properly discharged," Tewari said. He further said that the RBI is itself a conflicted institution by design.

"It is the regulator of the banks, it is the investment banker of the government, it is the owner, operator, regulator and player on the bond market, it is manager of government's credit and monetary policies, it is the foreign exchange regulator, it is the currency regulator," Tewari said..