RBI Governor asks bank CEOs to maintain vigil around risks build-up

Das also highlighted the issue of high growth in personal loans, which has been an outlier among other categories. He also talked about banks' exposure to non-banking finance companies

Banks should continue maintaining their vigil around any build-up of risks as there is no scope for any complacency, Reserve Bank of India (RBI) Governor Shaktikanta Das told the managing directors and chief executive officers of public sector banks and select private sector banks on Wednesday during an interaction.

“While noting the resilience of the domestic financial system with healthy balance sheets of banks, he observed that there is no scope for any complacency and banks should continue to maintain their vigil around build-up of risks, if any,” the regulator said in a statement. Das complimented the banks on their improved financial performance and that of the whole banking sector.

Das also highlighted the issue of high growth in personal loans, which has been an outlier among other categories. He spoke about banks’ exposure to non-banking finance companies. Worried over the growth of such loans, the RBI increased risk weights for unsecured loans and bank loans to NBFCs in November. He spoke about issues related to business model viability, adherence to co-lending guidelines and liquidity risk management.

Further, he also stressed the issues in IT and cyber security preparedness, operational resilience, digital frauds and strengthening of the banks’ internal rating framework.

Although he praised the financial performance of banks and that of the whole banking sector, at the same time he emphasised the importance of protecting customer interests.

“He emphasised that the customer grievance redress mechanism and protection of customers’ interests are of paramount importance for the safety and stability of the financial system and that of individual financial institutions,” RBI said.

These engagements, which are part of RBI’s continuous interaction with the Senior Management of its Regulated/Supervised Entities, were also attended by Deputy Governors M. Rajeshwar Rao and Swaminathan J, along with Executive Directors-in-Charge of Regulation and Supervision functions.