 "RBI Governor, Shaktikanta Das")
Reserve Bank of India (RBI) Governor Shaktikanta Das on Tuesday asked chief executives of banks to pay special attention to strengthening the governance and be extra careful and vigilant amid adverse global developments.
They should also focus on the tripod of banking stability consisting of compliance, risk management, and audit functions. The Indian banking system had shown good performance despite various adverse global developments, Das said in his remarks.
The RBI, in a statement, said the governor held meetings with the managing directors and CEOs of public sector banks (PSBs) and selected private banks in Mumbai. Deputy Governors M Rajeshwar Rao and Swaminathan J, along with a few senior RBI officials, also attended the meeting.
The issues relating to strengthening of credit underwriting standards, monitoring of large exposures, implementation of external benchmark linked rate (EBLR) guidelines, bolstering IT security, and IT governance were also discussed at the meeting. The interaction also dwelled on the timely and accurate sharing of information with credit information companies.
The improvement in recovery from written-off accounts also figured in discussions, the RBI said. According to rating agency ICRA, the recoveries (net of any haircuts) from the written-off pool are typically recognised as other income by PSBs. The net recoveries from the written-off pool were Rs 27,000-38,000 crore in the past four years. These recoveries accounted for 15-18 per cent of the operating profit of banks during the past four years.
Given the sizable written-off pool for PSBs, these recoveries will contribute significantly to the annual profit even in a scenario of low recoveries. The closing stock of Write-off pool stood at Rs 7.5 trillion at the end of March, up from Rs 6.8 trillion a year ago, according to ICRA’s estimates.
