Amid mounting bad loans in the banking system, Reserve Bank of India (RBI) Governor Urjit Patel on Tuesday told Parliament's Standing Committee on Finance that it doesn't have full powers to regulate public sector banks (PSBs), sources privy to the developments told CNBC-TV18.

Patel, who appeared before the parliamentary panel headed by Congress leader Veerappa Moily, specified ten areas, where the central bank can't control the PSBs.

The panel has members from different political parties, including former Prime Minister Manmohan Singh.

In a written reply to MPs, RBI governor said there is a need to amend Banking Regulation Act for full control of PSBs by the central bank.

There are 21 state-owned banks, including State Bank of India.

According to sources, Patel said only Section 51 of Banking Regulation Act applies to state banks and 'this forms a great constraint for a regulator and supervisor.'

So, Section 51 of Banking Regulation Act needs to be amended so that RBI can fully control PSBs, Patel said to the panel.

As per the Banking Regulation Act, PSBs are not companies but corporations formed by statutes, he added.

Patel told the panel that the issue related to control of PSBs by RBI has been referred to Government of India.

According to Patel, over 5,900 bank frauds happened in FY18 and this is a 16% rise from FY17.

Also, these frauds added up to over Rs 32,000 crore and this is a 35% rise compared to last year in terms of value.

First Published:Jun 12, 2018 4:58 PM IST