YH Malegam committee Current Affairs
Reserve Bank of India (RBI) has constituted an expert committee to look into the entire gamut of issues relating to classification of bad loans, effectiveness of audits and rising incidents of frauds. The committee will be headed by Y H Malegam, a former member of Central Board of Directors of RBI.
Terms of References
The committ will look into reasons for high divergence observed in asset classification and provisioning by banks vis-à-vis RBI’s supervisory assessment. It will suggest steps needed to prevent it, factors leading to increasing incidence of frauds in banks and measures (including IT interventions) needed to curb and prevent it. It will also look into role and effectiveness of various types of audits conducted in banks in mitigating the incidence of such divergence and frauds.
The committee was set up in wake up of Rs 11,400 crore SWIFT (Society for Worldwide Interbank Financial Telecommunication)-related fraud in Punjab National Bank (PNB) and RBI’s drive of strengthening supervisory framework in the country to avoid frauds. Government also had asked RBI whether it has at any stage detected fraud, involving letter of undertaking (LoUs) issued to foreign branches of Indian banks on behalf of companies promoted by Nirav Modi and Mehul Choksi.