New Delhi, Apr 6: Former Finance Minister Yashwant Sinha in an exclusive interview with Zee Business’s Mehak Kasbekar said the recent cases of bank frauds are just the tip of the iceberg and if probed thoroughly, more cases are likely to be revealed. Here are the excerpts of the interview.

Q: With the launch of Insolvency and Bankruptcy Code (IBC) code it was expected that everything will fall in line. Especially, when the Clause 29A of IBC says that a person will not be eligible to submit a resolution plan or bid for a company if he/she is a defaulter. But the IBC rollout has not been smooth. Do you think the government needed to do more homework before rolling out the IBC?

A: See, the laws and acts are framed in accordance with the prevailing conditions of the time. The government has tried to accommodate for all issues surrounding insolvency and bankruptcy but it is not possible to have a perfect law immediately. IBC was framed with good intentions, however, since it is facing certain implementation issues it can be re-looked at and is being amended. All acts like the IT Act, Companies Act and finance bill have been amended several times. But, there is an aspect in IBC that worries me and it is regarding litigation. I hope that every case does not end in up in complicated litigation.

Q: RBI Governor’s recent statement was on how adequate powers are not with the regulator to regulate Public Sector Banks (PSBs). It sent a message that everything is not right between the government and the RBI. Do you think that the RBI governor, who is the regulator of the central bank, has adequate powers?

A: Yes, I feel RBI has all powers to regulate banks. At the time, when the statement was made, I had made a point about whether the Governor ever brought this point up with the government and asked it to amend the RBI Act and assign the specific powers to him, so that he can have a control on the PSBs. I don’t remember that any such event ever happened.

The RBI plays a big role in controlling and managing the economy of the country. Its powers are equal to the powers that are conferred in the hands of the government as well as the finance minister. RBI is supposed to control the Monetary Policy of the nation as well as Inflation, while the government controls the Fiscal policy of the nation.

Interestingly, inflation is just not dependant on monetary policy but it needs a support of the fiscal policy. Thus, I would like to say that the two bodies should work in tandem with each other as any fight between them will not only cost the government or the RBI but also the country.

Q: Everyone was talking about Public Sector Banks (PSBs) being privatised. The debate gained strength after the Nirav Modi scam came to light. But, the debate came to an end the moment a similar problem surfaced in a private sector bank. What is your opinion on the privatisation of PSBs?

A: I have a different opinion on it. I feel ownership of the banks is not a big thing but reforms in the banking system are something that is needed, at regular intervals. Social responsibility, the thing that you were talking about, can be managed by the regulator, .i.e. the RBI. I would like to inform you that 40% of our priority sector lending is made in accordance with the RBI regulations. Thus, the regulator has all rights to monitor and question whether the banks are lending accordingly. When it comes to ownership, I will just say that ownership hardly matters when it comes to banks. Regulation is the only thing that must remain strong.

Q: Modi Government will be completing four years in May. Do you think the government has been able to do justice to the mandate with which it came into power?

A: No. We just talked about the banking system in India, everyone was aware of it. As a party’s spokesperson on matters related to economic issues till 2014, I always said that our government will hit the ground running when it comes to NPAs and stalled projects. But that is something that never happened. The finance ministry along with the RBI and the office bearers are responsible for the failure. Leaving everything on the PMO or a single person will never provide good results.