Why Has The RBI Escaped Scrutiny And Accountability Irrespective Of So Many

The Reserve bank of India, the country’s Monetary Authority, has been caught napping while the country has been in the grip of one failed financial institution after another. The failings are not in the case of financial institutions alone but also several banks that have gone bust in recent years.

The RBI has and plays a major role as the banking regulator, and yet under this role of the RBI, it has completely failed to uphold its role as a banking regulator.

In the last two years, the country has been rocked by an innumerable number of banking scams, and the RBI has been unaware and caught napping when it comes to playing its role as a banking regulator. This failure on the part of RBI is not recent; it has been repeatedly and unceasingly caught napping and “unaware” of such dealings in the banking space.

The question here is why the RBI has never been held accountable for the failures it has registered not once but several times through the decades. It failed to recognize the improper dealings in several of these banks and financial institutions. 

Also, the RBI officials under whose purview the workings of financial institutions and banks fall have failed to perform their role as a banking regulator. They have never been questioned or held accountable.

Through the decades, the RBI has systematically and continuously escaped all forms of inspection and any form of accountability.

Through the years, several have tried to file a PIL and to hold RBI accountable. Still, RBI has managed to avoid all such PIL’s to date and has never been under any form of public scrutiny, questioning, or accountability.

Why did the RBI fail to see the warning signs of several Banks going bust?

The Role of the RBI as a banking regulator is an important one. For any country and its citizens to have faith and trust in the country’s banking system is a must. 

If the public and the citizens of the country are spending sleepless nights wondering where they should put their hard-earned money? Or which bank is safe to invest in? 

If the banks they have invested in are indulging in any unlawful practices and thus can go bust as a scam may be discovered, all these are important and legitimate questions.

However, the RBI has, in fact, repeatedly failed to play its role as a banking regulator; it has been unable to give enough time and make an effort to scrutinize any red flags that should have been raised or may have been raised but failed to act promptly.

The result of this is that tons of people have lost their money and have no recourse ever to recover their lost finances.

What has the RBI being doing?

Until a few years ago, the go-to – strategy adopted by the RBI was to force merge the failed banks with either public sector banks or nationalized banks. This trend, however, has now thankfully stopped. 

One of the reasons for the same is the fact that the Modi government has been quite clear in its approach of not nationalizing private losses.

Another reason for the same is that the forced merger – all the bad debt, the bad loans which are relatively high, and in the nationalized banks itself, how will force merger happen?

Therefore to address this issue, the government resorted to merging nationalized banks.

Another problem area is the collapse of financial institutions or companies which have been declared as steadily important, which means these financial companies should be required to make higher disclosures and should be under more scrutiny of the RBI, which it has failed to do.

The questions that arise here is –

1. Why and how did the RBI fail to monitor these financial institutions and Banks?
2. Why has the RBI never been questioned or held accountable for the failure on its part?
3. Why have the RBI officials never been questioned and held accountable for failing to monitor and catch the irregularities in time that has been going on in these institutions and banks?
4. Also, if any member of the society has raised a red…