RBI monitoring business models of Banks

The central bank is closely monitoring the business models and strategies of banks, Reserve Bank of India Governor Shaktikanta Das said on Tuesday.

He, however, clarified that the central bank’s move is not intended at interfering in banks’ commercial decisions, but it will red flag lenders if there is any risk building up.

At the RBI, we have started taking a closer look at the business models and strategies of banks.

Take your commercial decisions, we will not interfere, but we will see what kind of vulnerabilities and what kinds of risks are building up, and our first priority would be to caution banks themselves, Das said at the SBI’s Banking and Economic Conclave.

He said the RBI’s supervision is now almost on a real-time basis and is not an annual exercise anymore. Technology has enabled a more intensive look towards the supervision process.

While banks take their commercial decisions, they should also factor in the available liquidity and also the kind of interest rate structures they are providing. These decisions should be taken based on prudent principles, he said.