RBI panel to probe 7 banks’ equity exposure

Our Banking Bureau

Kolkata, Sept 12: The Reserve Bank of India (RBI) is setting up a technical committee to probe the alleged violations of its prudential norms on equity exposure by seven private sector banks.

Those facing the investigation are Bank of Madura, Bank of America, HDFC Bank, Karnataka Bank, Centurion Bank, Development Credit Bank and Global Trust Bank.

The technical committee will have senior officials of RBI and possibly some officials from the Securities & Exchange Board of India (Sebi). The RBI may follow up with a standing committee that will monitor all banks in this regard every six months.

Highly placed RBI sources said the seven banks have crossed the RBI limit for equity exposure, which was five per cent of total advances as per Reserve Bank guidelines.

The total equity exposure of Bank of America is Rs 1.34 crore, while that of Karnataka Bank is Rs 21.23 crore.

The committee is being formed following criticism from the Joint Parliamentary Committee (JPC) probing this year’s scam. The JPC had blamed the Reserve Bank of India for negligience in overseeing the activities of the banks in the stock markets.