RBI Governor Shaktikanta Das has called on banks to focus more on governance and less on the relentless pursuit of profit. In a meeting with CEOs of public and private sector banks, Das emphasized the importance of vigilance against risks and maintaining strong governance practices. He noted the improved financial performance of the banking sector but cautioned against complacency, urging banks to continue monitoring potential risks diligently.
Das expressed concerns about the rapid growth in personal loans, which has outpaced other loan categories. The RBI recently increased risk weights for unsecured loans and loans to non-banking financial companies (NBFCs) to manage these risks better. Additionally, he highlighted issues related to the viability of business models, co-lending guidelines, and liquidity risk management. The governor’s remarks underline the need for banks to balance growth with prudent risk management practices.
IT and cyber security were also key points of discussion. Das stressed the need for banks to enhance their cyber security measures and operational resilience to prevent digital fraud. He called for improved internal rating frameworks to ensure robust risk assessment and mitigation. The RBI aims to ensure that banks not only achieve financial success but also protect customer interests and maintain system stability.
Customer protection remains a top priority for the RBI. Das emphasized that banks must have strong grievance redress mechanisms to safeguard customer interests. This focus on customer protection is seen as essential for the long-term stability and safety of the financial system. The RBI’s ongoing engagements with bank leadership are part of its broader strategy to reinforce these priorities.
Overall, the RBI’s directives highlight a shift towards sustainable banking practices that prioritize governance and risk management over mere profit-making. By addressing these issues, the RBI aims to foster a more resilient and customer-focused banking sector in India.
