Mundra calls for robust risk mitigation system at banks

In the wake of alleged Rs 6,100-crore black money scam at state-run Bank of Baroda, Reserve Bank Deputy Governor S S Mundra today said there is a need to strengthen the risk mitigation system and also to improve oversight on a real-time basis.
"We would need to," Mundra said when asked whether more safeguards are needed to stop such incidents.
The commercial banker-turned central banker, however, said there is already a set of safe guards in place.
Before being appointed as the deputy governor in July 2014, Mundra was chairman and managing director of Bank of Baroda (BoB).
"How the system can be made more robust, this is what we are examining now. If there are multiplicity of transactions then how it can be pooled, how there can be more efficient use of technology, how the oversight can be more real-time. These are the more broad-objectives that we are working one," Mundra said.

The deputy governor further said the investigation into the BoB scam is on and the RBI is looking at comprehensively all the transactions within bank as well as other entities.

Early this month it was found that through multiple transactions to fictitious accounts and non-existent export bills, almost Rs 6,100 crore worth of forex transactions where carried out from Ashok Vihar, Delhi branch of BoB in the past one year.
Currently, the CBI and the ED are probing the matter and have arrested a number of people including a senior official of HDFC Bank in the alleged scam.
When asked whether they've asked for any information from the CBI that is probing the alleged scam, Mundra said, "the agency is investigating the matter... At an appropriate time notes will be exchanged."

When asked whether the regulator is concerned with the incident, he said one incident should not be a matter of concern and the BoB issue does not reflect a system-wide issue.
When asked whether RBI has sought any information from its Hong Kong counterparts as the transactions were routed to the island city, he said, "RBI has a supervisory and regulatory cooperation with a number of authorities and we will approach then when we consider it necessary and appropriate."
Addressing the Ficci-organised capital market summit, Mundra also pitched for a vibrant capital market so that investments could flow in.
Describing shadow banking as one of the biggest threats to banking, he said one of the major risks global regulators are discussing today is the shifting of risks from banking sector to shadow banking sector, which in the international context is more about asset mangers than about para-bankers that our market is facing.