RBI governor Urjit Patel breaks his silence on PNB scam

RBI governor Urjit Patel defended the regulator role, saying it is difficult for it to be present everywhere to contain such instances. 

The RBI has been facing severe criticism over the Rs 13,000-crore scam at PNB, which is being billed as India's biggest banking scandal. Patel said the system of dual regulation -- by finance ministry and the RBI -- has led to fissures in the landscape of regulatory terrain. 

Patel was speaking Gujarat National Law University. He was responding to the attack that the RBI was not prompt enough on recent cases of fraud. 

On the prevention of frauds in the banking system, Patel said that investigations and penalities will serve as deterrance for future. 

Patel also said that banks can keep large buffers in their capital structure to bear the losses which occur due to such frauds. Patel said that the RBI is working to break the nexus of some banks and businesses cleary hinting at the PNB scam where diamantaire Nirav Modi colluded with some bank employees to pull off the massive scam. 

RBI Governor Urjit Patel also said that like the 'Neelakantha', the central bank will consume poison and face brickbats, but will persist with endeavour to become better with each trial.