More measures for banking, NBFCs to be announced soon: Shaktikanta Das

  • More measures for banking, NBFCs to be announced soon: Shaktikanta Das

More measures for banking, NBFCs to be announced soon: Shaktikanta Das

Mumbai: The Reserve Bank of India (RBI) will continue to intervene in foreign exchange market despite being on the currency manipulator watchlist, governor Shaktikanta Das indicated on Saturday while delivering the Nani Palkhivala lecture in Mumbai.

"If there's a proposal to set up a bad bank, the RBI will look at it".

Das also stressed the need for proper internal audit in banks, calling it an important component in ensuring the financial stability of these institutions and the larger financial system.

Reserve Bank Governor Shaktikanta Das on Saturday said that the central bank remains committed to take any further necessary measures to support the economy.

Indian Banking Association and the industry chamber CII had submitted a proposal to set up a national level asset reconstruction company with the government infusing capital worth Rs 10,000 crore. The regulated entities, on their part, need to strengthen their internal defences to identify emerging risks early and manage them effectively.

"The risk management function in banks and NBFCs should evolve with changing times as technology becomes all-pervasive and should be in sync with global best practices".

"In this context, instilling an appropriate risk culture in the organisation is important".

"This process needs to be put on the fast track", he added.

"Recent events in our rapidly evolving financial landscape have led to increasing scrutiny of the role of promoters, major shareholders and senior management vis-a-vis the role of the Board. But then it is for the government and other private sector players to really plan for it".

"Expenditure on physical and social infrastructure including human capital, science and technology is not only welfare-enhancing, it also paves the way for higher growth through their higher multiplier effect and enhancement of both capital and labour productivity", Mr. Das said.

Maintaining and improving the quality of expenditure would help address the objectives of fiscal sustainability while supporting growth, he added.

State Bank of India, the nation's biggest lender, and peers are discussing a potential proposal, Rajnish Kumar, who headed the bank at the time, said in May. "Establishing a bad bank today would aggregate but not serve the objective that we have observed in other markets", a recent report by Kotak Securities said.

To a query from a participant seeking some sort of solution to allow smaller NBFCs access more capital from banks, the governor said "for the scale-based regulations for NBFCs, the discussion paper is nearly ready and it will come out in next few days". Cost of compliance to rules and regulations should be perceived as an investment as any inadequacy in this regard will prove to be detrimental, he said.