RBI pushes for stronger governance at public sector banks

The Reserve Bank of India on Monday urged public sector banks to strengthen their boards of directors and focus more on risk management.

In a meeting with senior management of PSB in the capital, RBI Governor Shaktikanta Das asked lenders to strengthen governance so that they can identify risks early. “The governor also emphasized the need for banks to ensure continued financial and operational resilience,” according to a somber statement from the Reserve Bank of India. The theme of the meeting was “Governance in Banks – Driving Sustainable Growth and Stability”.

The bankers did not comment on the deliberations during the one-day meeting.

The governor acknowledged the role played by banks in supporting the economy and maintaining resilience, as well as improving financial performance in the face of many adverse shocks in recent times. The statement added that he urged the banks’ board members to further strengthen governance and assurance functions (risk management, compliance and internal audit) so that banks can identify and mitigate risks at an early stage.

The conference included speeches by the Deputy Governors and technical sessions on governance and assurance functions, credit risks, operational risks, information technology/electronic risks and data analytics. The two Deputy Governors, M.K. Jain and M. Rajeshwar Rao, along with the executive directors representing the Supervisory Department and the Regulatory Department of the RBI, and other senior officials, spoke at the meeting.