Mumbai: Reserve Bank Deputy Governor KC Chakrabarty on Saturday said MNC banks must play their roles in the nation's development. "You (foreign banks) must participate in the development process of the country if you (foreign) want to think big," Chakrabarty said.
Speaking to reporters on the sidelines of an ICAI function, he further said that foreign banks have been given sufficient time (of five years) to raise their priority sector lending (PSL) portion to 40 percent from 32 per cent now.
The RBI on Friday issued revised guidelines stipulating that foreign banks with a branch network of 20 and above must abide by the priority sector lending target at 40 per cent of their total advances, at par with domestic ones.
"Foreign banks having 20 or more branches will be brought on par with domestic banks for priority sector targets in a phased manner over a maximum period of five years starting April 1 next," it said.
For smaller lenders, the target has been retained at the present 32 per cent. The move will impact only four of 55 foreign banks, which have over 20 branches. Accordingly, Standard Chartered Bank, Citi, HSBC and Royal Bank of Scotland will come under the ambit of the new norms.
Meanwhile, when asked for his comments on the recent controversy involving HSBC, wherein a US Senate committee found loopholes with the bank's anti-money laundering measures, Chakrabarty declined to give a direct answer whether the RBI was also probing on those lines or not.
He said that as a regulator, RBI looks into all the aspects of the entities it regulates and moreover, nothing has come either from the Federal Reserve or the US Senate for it to launch a fresh probe.
"If we've something, in documents, if it comes to us in writing from the Federal Reserve, we will look into it. But otherwise also we are looking into it (as an ongoing process)," he said.
Addressing the ICAI event, Chakrabarty said the Reserve Bank was contemplating to do away with branch-level audits carried out by public sector banks as a practice, saying in the era of centralised data availability, it was a waste of
time to do so.
"I think the branch audit has lost its relevance. It does not give any quality...We want to avoid duplication of the job, accountability has to be fixed and also time is reduced. We are going to do away with the branch audit. It will be done in a particular manner," he said, without giving a time frame.
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