New Delhi, July 9 (UNI): Finance Minister P Chidambaram today rejected a proposal to set up a National Rural Bank to regulate the affairs of 196 Regional Rural Banks (RRBs) in the country, saying it would not help improve their functioning.
Instead, the sponsor banks of each RRBs would be made accountable for their malfunctioning and corrupt practices, if any, in disbursement of loans besides their running in loss, he informed the Lok Sabha.
Replying to a barrage of queries by members during Question Hour, Chidambaram said 156 of the total 196 RRBs had now been earning profit.
The remaining would be recapitalised and restored to financial health, he added.
The Minister disagreed with suggestions from members that RRBs should reduce the interest rate to three-four per cent as part of the UPA's commitment to uplift rural people.
"It is not possible as they (RRBs) draw 70 per cent of the capital from public-sector banks on certain interest rates for its onward disbursement to its rural clientele." He said the government was examining the necessity of enacting any special law for dealing with corrupt practices in public-sector banks.
At present, such cases are being dealt by the Fraud Investigation Agency functioning under the Company Act.
About one-third of the bank officials and staff found involved in corruption have been convicted.
The conviction ran from charging them under CrPC provisions to dismissal from service, he added.
