New Delhi: Reserve Bank of India Governor Shaktikanta Das on Monday asked public sector banks to further strengthen their governance and risk management with a view to identify and mitigate risks at an early stage.
The governor was addressing a Conference for the Directors on the Boards of Public Sector Bank in the national capital. ‘Governance in Banks - Driving Sustainable Growth and Stability’ was the theme of the conference.
In a statement, the central bank said Das acknowledged the role played by the banks in supporting the economy and maintaining resilience along with improved financial performance in the face of several adverse shocks in recent
times.
“He (Das) exhorted the directors of banks to further strengthen the governance and assurance functions (risk management, compliance and internal audit) so that the banks are able to identify and mitigate risks at an early stage,” it said.
Das also emphasised the need for banks to ensure continued financial and operational resilience. Deputy Governors M K Jain and M Rajeshwar Rao along with executive directors representing RBI’s department of supervision and department of regulation, and other senior officials, also participated in the conference.
There were technical sessions on governance and assurance functions, credit risk, operational risk, IT/cyber risk and data analytics, the statement said. On the recommendation of RBI, the government has introduced many reforms in governance and provided more autonomy to the board of public sector banks in recent times.
The reforms also include an independent professional body for selection, objective and transparent selection and allotment on the basis of merit-cum-performance.
Meanwhile, a Reserve Bank article said on Monday that, India’s growth in the April-June quarter is expected to be driven by private consumption, supported by reviving rural demand, and renewed buoyancy in manufacturing.
The global economy is transfixed in the cross-currents of slowing growth and high inflation, and an uneasy calm prevails in the global financial markets as they await clearer signals from policy authorities on banking regulation and supervision, and contours of deposit insurance, it said.
In April and the first half of May 2023, domestic economic conditions have sustained the quickening of momentum seen in the last quarter of 2022-23, said the article on ‘State of the Economy’. Headline inflation eased below 5 per cent in April 2023, for the first time since November 2021.
It further said corporate earnings are beating consensus expectations, with banking and financial sectors posting strong revenue performance, aided by robust credit
growth.
“GDP growth in the first quarter of 2023-24 is expected to be driven by private consumption, supported by revival in rural demand that is underway on the back of the encouraging developments in both the kharif marketing season of 2022-23 and the rabi marketing season of 2023-24, the sustained buoyancy in services, especially contact-intensive sectors, and moderating inflationary pressures,” it said.