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RBI pushes for stronger governance at Banks

May 23, 2023

RBI pushes for stronger governance at Banks
India’s central bank on Monday pushed the country’s lenders to strengthen their boards and increase focus on managing risk.

At a meeting with senior management of government-owned banks on Monday, Reserve Bank of India Governor Shaktikanta Das asked lenders to strengthen governance so that they are able to identify risks early.
 
“The Governor also emphasized the need for banks to ensure continued financial and operational resilience,” according to a statement from the RBI.
 
Reuters had earlier reported, citing sources, that bank executives at the meeting were urged to focus on keeping risk in check amid a high growth in credit.
 
The meeting with banks comes against a strong credit market backdrop, with loan demand running more than 15 per cent higher than a year ago. Deposit growth, however, has been weak.
 
The RBI cautioned that high growth comes with the risk of bad loans, said a banker who attended the meeting.
 
Other issues covered in detail were IT and cyber security risks, another banker said.
 
Both bankers declined to be identified as they were not allowed to speak to the media.
 
“The emphasis of the RBI’s meeting with banks was to strengthen the banking system of India further,” said Charan Singh, chairman of Punjab and Sind Bank.
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