New Delhi, May 11: Estimates Committee of Parliament has deprecated the approach of shareholder and regulatory agencies in discharging their responsibilities towards Regional Rural Banks (RRBs), saying it is "lackadaisical". Sponsor banks have not been effectively monitoring the working of RRBs. State government nominees often do not attend board meetings of these banks and many state governments have not paid their share of equity support to them, the report on Regional Rural Banks, tabled in Parliament, said.
In order to improve the regulatory and supervisory systems of RRBs, it said supervision by the sponsoring institution should be with ownership concern and in a nature of periodical scrutiny of the progress of RRBs sponsored by it.
Toeing the line of the Chalapati Rao Committee, it recommended constitution of audit committees in RRBs with proper system control, internal audit, inspection and concurrent audit.
Noting that out of 196 RRBs, figures regarding frauds and misappropriation of funds pertaining to only 22 RRBs are available with the finance ministry, the committee was highly critical of the lack of supervision and monitoring by sponsor banks, Nabard, RBI and Finance Ministry on serious irregularities like frauds.
The Estimates Committee expressed concern over the rising number of frauds and said as per the information available to it, staff members of RRBs were responsible for most of fraud cases. Bureau Report