NEW DELHI , RBI , STANDING COMMITTEE OF FINANCE : The functioning of the Reserve Bank of India (RBI) is to soon come under greater scrutiny of Parliament.

The Standing Committee of Finance is proposing to examine the quality of supervision and oversight of financial institutions, inflation targeting guidelines and monetary transmission, and a performance appraisal of the banking system. All these issues intersect with RBI.

“One of the topics that we will be taking up in the committee, and it reflects widespread consensus among members, is the functioning of the RBI and what we can do to further strengthen the institution," Jayant Sinha, chairman of the standing committee on finance, said in an interview. “The governor of the RBI reports back to Parliament through the committee. We will shortly be having him come and present to the committee as well. As has been the practice, we will examine a host of issues related to RBI."

RBI has come under criticism for its failure to detect the fraud in the Punjab and Maharashtra Co-operative Bank. RBI’s ineffectiveness in ensuring monetary policy transmission has also been a subject of debate.

However, Sinha said the role of the committee will be constructive and forward-looking. “We want to look at how RBI has been functioning in terms of its monetary policy, in terms of its supervisory activities, the advice that it provides to the government. So, we will be conducting several hearings to look at RBI’s functioning," he said. This will include interacting with RBI governor Shaktikanta Das.

The committee will not look at the matter related to resource transfer from RBI. “That has already been looked at in detail by the (Jalan) committee," said Sinha.

Apart from RBI, financial regulatory institutions that come within the purview of the committee include the Securities and Exchange Board of India, Competition Commission of India, Insolvency and Bankruptcy Board of India, Pension Fund Regulatory and Development Authority, and Insurance Regulatory and Development Authority (Irda).

Sinha said one of the areas the committee wants to examine is whether India’s regulatory institutions are well-equipped and robust to achieve a $5 trillion economy and subsequently a $10 trillion economy. “All institutions have to be continuously improved, enhanced, so that they are equipped for the demands of the future."

However, the move may not be above criticism. Senior Congress leader M. Veerappa Moily, who chaired the standing committee on finance during the previous Lok Sabha, said parliamentary standing committees have limited oversight. “I do not think routine oversight of financial institutions is within the scope of parliamentary standing committees," he said.

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