Public spat between the Reserve Bank of India and the finance ministry in fixing the blame over the Rs.13,000-cr. Punjab National Bank scam involving diamantaire Nirav Modi and Mehul Choksi is exposing the fault lines running beneath the complicated Indian banking system. At the heart of the debate is whether the RBI should have identified and plugged the gap with its powers to supervise, inspect and direct banks, or the regulator’s hands are tied when it comes to having its way with banks that are owned by the state. The banking industry is plagued by the same menace that is holding back the nation on other fronts too – many overlapping laws that make regulation difficult and help the smart one escape. Although the PNB issue doesn’t involve the absence of power or interplay of various legislation leading to let the fraud going undetected, it throws open an opportunity to revisit various laws that govern one industry.

(Economic Times)