At the meeting of State Level Bankers Committee for Oct-Dec quarter held on Wednesday, local businesses reiterated their complaint that private banks are not honouring LCs of PSBs
National banking watchdog will meet all banks on Thursday in the city over complaints that private banks are not honouring the Letter of Credits (LC) of Public Sector Banks (PSBs). Which private banks are not honouring the LCs will be investigated, said sources.
At the meeting of State Level Bankers Committee (SLBC) for October-December quarter held on Wednesday, local businesses reiterated their complaint that private banks are not honouring LCs of PSBs. “The issue was a part of the agenda of the meeting. To this regard, the Reserve Bank of India (RBI) will organize a meeting of controlling heads of the bank. Which banks are not honouring the LCs will be taken up during the meeting,” said Rajesh Kumar Yaduvanshi, executive director of Dena Bank, the lead bank in Gujarat.
Local businesses have been complaining that after the alleged fraud in Punjab National Bank (PNB) over the misuse of Letter of Undertaking (LoU), private banks have stopped honouring the LCs of PSBs. Shailesh Patwari, president of Gujarat Chamber of Commerce and Industry (GCCI) raised the issue during the meeting.
“How can private banks dare to dishonour the LCs. Representatives of PSBs supported our claim. To our shock, the representatives of private banks denied our claim. Then we challenged that what action RBI will take against these banks if we provide evidence to our claims?” said Patwari. He said that small businesses are the worst affected because of the move. He warned that if Indian banks are not honouring the LCs of their fellow banks, foreign banks will also take a cue from them and that will hurt the Indian banking sector.
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