The handling of the nonsuccess of the financial institutions has come to the limelight and has one of the most influenced talks of the country’s banking sector in recent years. Under RBI’s guidance, four financial organizations faced a crisis in the past two years which included IL&FS, Dewan Housing, and Finance Corporation, Laxmi Vilas Bank, and Yes Bank.
The reasons behind the crisis for each and every bank might have been different but what remains central to all four banks are that they were under the guidance and the supervision of RBI which has utterly failed as a watch guard. The periodical inspection had been conducted by the RBI on a regulatory basis but the signs of the failures and the malpractice were only detectible at the final stage which had eventually been too late. A section of the banking industry specialist and investigators believe that if RBI had not have waited for the final stage the costs of the outlay to a certain segment of investors could have been lower.
For instance, we take up an example of Yes Bank then the administrative rule infringement was indicative since 2017-18. In the year 2015, eminent research had brought out about the crucial asset quality problems and to utter dismay except for the regulator seemed to have known the issue. The evolutions at the Dhanlaxmi Bank draw even more attention. A few of the prominent shareholders had voted out of the then CEO Sunil Gurbaxani who had been approved by the RBI and further this lead to the conclusion that the CEO could be ousted by the shareholders and the regulator had no say over them. This further sets an example for other private banks to rule out in their favor and act above the regulator who is expected for guidance. So here all we can see is may it be any matter the regulator has always been drawn to a compromise formula by a bank advocate.