Despite guidelines, there are loopholes in the level of operations in banks: RBI Governor
[ad_1]
Reserve Bank of India Governor Shaktikanta Das on Monday said that despite guidelines, lapses have been found at the operational level in banks. Addressing the directors on the boards of banks, Das said such lapses could create some degree of instability.
Reserve Bank of India Governor Shaktikanta Das on Monday said that despite guidelines, lapses have been found at the operational level in banks. Addressing the directors on the boards of banks, Das said such lapses could create some degree of instability. He also criticized ‘smart accounting’ for hiding stress at the account level and inflating financial performance. Addressing the meeting called by the RBI, Das said, “It is a matter of concern that despite the guidelines on corporate governance, we have found some deficiencies at this level in some banks. This may create some degree of instability in the banks.
He said that the Board of Directors and Management of the banks should not allow such lapses. The matter has been taken up at individual level with the banks in the past. The governor said that sound governance in the banks is a joint responsibility of all, including full-time and non-executive or part-time directors, along with the board of directors. According to Das, the RBI has found that banks are adopting ‘smart accounting’ practices to artificially inflate financial performance. He said that banks try to hide the real situation regarding stressed loans.
For this they also take help of other banks. Under this, the sale and repurchase of each other’s debt is resorted to in order to make it look better. Good borrowers are encouraged to restructure their loans with stressed borrowers. The purpose of all this is to hide the pressure. Das, without naming any specific case, said that there has been a dominance of CEOs in discussions and decision-making in the board of directors. In such cases, it was found that the Board of Directors are not vocal about keeping their points.
He said, “We would not like such a situation to happen. At the same time, there should not be a situation in which the CEO is prevented from performing his functions.” But with risk aversion, banks may be adversely affected. He also advised banks to be cautious about growth strategy, pricing etc.
Disclaimer:IndiaTheNews has not edited this news. This news has been published from PTI-language feed.
[ad_2]
Source link
