New Delhi: Disagreeing with RBI Governor Urjit Patel, former central bank chief C Rangarajan today said the Reserve Bank has 'enough powers' to supervise the banking sector, though it has to consult government while taking action against earring bankers.

Rangarajan's statement comes within days of Patel expressing anguish over the spate of frauds in the banking sector and demanding more powers to deal with them.

Referring to Letter of Undertakings (LOU) which were discontinued by RBI in the aftermath of the fraud perpetuated by billionaire jeweller Nirav Modi and his associates, Rangarajan said that these could be be reintroduced with necessary precautions.

Modi and his associates allegedly defrauded Punjab National Bank of around Rs 13,000 crore through fraudulent LOUs of PNB.

"As far as supervision of banks is concerned, there are enough powers(with RBI).

But to take action on a PSB, consultation with the government will be needed," Rangarajan, who was at the helm of the central bank from 1992 to 1997, said on the sidelines of an event here.

Asked whether time has come for privatisation of PSBs, he said that the issue of privatisation has to be discussed in an entirely different context.

"It cannot be discussed in the context of appearance of frauds or something like that.

That is (frauds) something that not only happens in PSBs but also happens in private banks," Rangarajan added.

He further said, "I certainly think that there is case for depreciation of rupee.

" Rangarajan noted that India's recent decision to increase import duties on some products has come at a wrong time and was ill-advised.

"Recent custom duty hike on certain products creates the an argument for US President Donald Trump to say that I will also do (increase import duties).

It has come at a wrong time. Let me say," he pointed out.