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April 3, 2001
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Money > Business Headlines > Report April 3, 2001 |
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RBI deputy governors' tenure under cloudBS Banking Bureau in Bombay The Rs 12-billion Madhavpura Mercantile Co-operative Bank scam has clouded chances of a second round of extension for two Reserve Bank of India (RBI) deputy governors, Jagdish Capoor and SP Talwar. According to sources, the issue has been put on the backburner for the time being. Both the deputy governors -- who had earlier got a two-year extension -- are slated to retire in end-June. Though the RBI is keen on retaining both of the deputy governors for another two years, the recommendation may not find favour with the finance ministry against the backdrop of the Madhavpura crisis. Talwar is in charge of supervision while Capoor's portfolio includes co-operative banks. Sources in the ministry said the Securities & Exchange Board of India (Sebi) will undergo a complete overhaul, while, in case of the Reserve Bank, the proposed extension of the two deputy governors may not come through. "At best, Talwar may get a one year extension, while Capoor's innings shall come to an end," sources said. "There may not be any fault in supervision but, prima facie, there seems to be a failure of the central bank's market intelligence. It also did not adopt a proactive approach to handle the co-operative bank crisis," said a source in the North Block. RBI insiders, however, pointed out the central bank had informed Sebi about the irregularities in the movement of the Global Trust Bank scrip in October-November last year. The RBI had also alerted the Registrar of Co-operative Societies about many skeletons in the Madhavpura cupboard two years back. "As long as the co-operative banks are subjected to dual regulation (of the RBI and the Registrar of Co-operative Societies), the grey areas will remain. After all, RBI can only recommend corrective actions -- it cannot enforce implementation (of them)," they said. Both Talwar and Capoor got a two-year extension in June 1999 when their terms came to an end. The third deputy governor YV Reddy is slated to retire in August this year.
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