K C Chakrabarty Wants to Keep Penalties at "Peanut" Level - Advocates only Naming and Shaming of Shameless People

by

Rajesh Goyal 

When I was  going through online edition of ET, I was shocked to read the headlines "Fines on banks should be only for naming and shaming: RBI Deputy Governor K C Chakrabarty".    I was shocked as Governor, Mr Subbarao has  rightly earlier called the present penalties as "peannuts", and Mr Rajiv Takru from Department of Financial Services wanted fines to be something like Rs 500 crore, rather than Rs 1 crore provided in the law.  I fully support the views of Mr Subbarao and Mr Takru on this issue, and there is a need to look into increasing the penalties.  

Mr Chakrabarty appears to be completely on the sides of the  violators of banking norms.   He wants the fines to be only for naming and shaming for violators.  Can Chakrabarty explain why number of officers, who were charge sheeted during his tenure as ED and CMD of the banks headed by him, were given punishments of suspension and dismissal.   Why he did not change the policies so that violators / fraudsters  should have been merely named and shamed.   In that case, all banks must have a BlackBoard wherein the violators /fradusters are named and then they can continue their jobs of violating the norms or looting the bank.  

I am surprised that how can a person of such a high rank can issue statements in defiance of his seniors like RBI Governor and Secretary, Financial Services.   Had he left his General Manager untouched, if he had dared to such statements which were against his public stand.   I feel it tantamount to defiance of seniors.  If he had any such views, he should have talked about these within four walls i.e. during the meetings with RBI Governor and Mr Takru.    Can a lower functionary be allowed to issue statements which are against the decisions taken / being discussed at top level.   Bankers still remember when he was stripped off all, but Raj Bhasha, portfolios owing to taking contra views.   It appears he has not learnt the lesson as yet.   Propriety demands for stiff actions and nip in the bud or soon a chorus from heads of defaulting banks will grow for no action in such cases.

Can Chakrabarty explain why there are huge penalties in western countries for violation of banking norms?    As far as I am aware, top brass in western countries is not as shameless as they are in India.    I am only a small fry and Mr Chakrabarty, who had headed two top PS Banks and is now DG, RBI, must be aware that banks are back bone of nation and people trying to violate banking norms are irreparably damaging Indian economy and hurting the poorest by helping to generate black money or put a lid on such illegal activities.   However, it appears the top brass of banks is too becoming a part of the team of black money hoarders and supporters.

Naming and Shaming can be partially effective if people understand what is shame and are ready to resign on grounds of morality and accountability.   At present in India we are living a shameless society, where politicians, bureaucrats and top brass of banks behaves shamelessly.    If little shame is left, it is only few people in middle class and poor.   After unearthing of scams, the politicians appear on TV shows with smile and grin, making mockery of the general public.  Even when pressure increases, they are not ready to resign or accept their fault, till they are actually thrown out.   We have seen what happened in case of Mr Raja or Mr Bansal or Mr Anand Kumar or BCCI President.    CAG has named so many things in his reports, but not a single Minister is feeling shamed.     In today's world, shame is difficult to find and may be shame has itself has become shameless.  

 A few week backs, Mr Chakrabarty had given a clean chit to three private banks without any investigation.  Only today RBI has fined all these three banks with penalties which are interim in nature but exceed Rs 10 crores.     Had I issued such a statement of clean chit and later on proved wrong, I would have felt extremely shamed.   Does Mr Chakbrabarty  feels shamed of his acts?    Had he thought of resigning from his post and then taken the cause of these three private banks at a personal level.    Had this been done by his any junior, he must have been on the verge of dismissal by this time.   Thus, to talk of naming and shaming the violators is only an exercise for cover up and save his colleagues / friends in the banking circle.   

It appears Mr Chakrabarty is afraid of his past when he headed public sector banks and such violations may have been order of the day.    By his statements like giving clean chit without investigation or to say penalties are sufficient and should be for merely naming and shaming,  he has shown his attitude towards violators of banking norms.   Luckily, he has shifted to RBI or else he / his bank might have also been in line of firing of RBI. 

Another question which comes to mind is, let us suppose fines are only for shaming.   What will be follow up of that shaming.   Will the heads of CMDs / EDs etc will roll or they will wear burqas?  Will the violators will be publicly humilated or they will continue to enjoy the perks under the umbrella of RBI?    Mr Chakrabarty should have elaborated on the follow up of shaming.  

I really feel shamed when I read that people at such high posts issue such shameless statements.  Saving India and Indian banking industry is extremely difficult.   I will be keenly watching how much shame the CMDs / EDs of those banks which have been fined will show in next one year.  Public is also waiting for  the action against PS Banks exposed by Cobrapost.