The parliamentary standing committee on finance has cancelled a crucial meeting with the RBI governor Urjit Patel that was scheduled to take place on November 12.
The parliamentary standing committee on finance has cancelled a crucial meeting with the RBI governor Urjit Patel that was scheduled to take place on November 12. While an important item for the parliamentarians to discuss with the governor in the meeting was “issues including shortcomings in regulatory supervisions” of the debt-laden Infrastructure Leasing and Financial Services (IL&FS), the conference has been called of in the wake of the many panel members including chairman Veerappa Moily being busy electioneering, sources said.
The standing committee was to seek Patel’s views on the steps taken by the regulator with regard to IL&FS before the crisis erupted and during its unravelling since late September.
“The standing committee chairman Veerappa Moily and a few other members are busy with state assembly elections. So the meeting with RBI governor has been cancelled,” a member of the panel told FE.
No new date has been finalised yet for the meeting with the governor, he added.
Assembly elections are being held in five states including Chhattisgarh, Madhya Pradesh and Rajasthan in November-December. No new date has been finalised yet for the meeting with the governor.
The parliamentary panel was to quiz Patel on the reasons for crisis in IL&FS and “why it was allowed to develop into such a magnitude”.
Even though the primary purpose of the governor’s meeting with the parliamentary body was to seek the RBI’s views on the Banning of Unregulated Deposit Schemes Bill, 2018, the person cited above said apart from the IL&FS issue, Patel’s views would also have been sought on the latest report of the central bank on demonetisation, which noted that as much as 99.3% of the demonetised high-value notes returned to the banking system.
Domestic capital markets were roiled since the last week of September after IL&FS revealed a series of delays and defaults on its debt obligations. The ministry of corporate affairs has informed the National Company Law Tribunal that the risk management committee of IL&FS met only once between 2015 and 2018 even though the leverage ratio jumped to 13, against the reasonable level of 3-4. Importantly, between 2014 and 2018, the infrastructure financier’s loans ballooned with the consolidated debt climbing to Rs 91,091 crore from Rs 48,671 crore.