Categories: Business

Indian banking sector continues to be safe and stable, says RBI Governor Shaktikanta Das | Excessive risk-aversion trend will harm banks, RBI Governor Das cautioned

Photo: INDIANEXPRESS

Indian banking sector continues to be safe and stable, says RBI Governor Shaktikanta Das

new Delhi. Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday cautioned banks that the tendency to avoid risk excessively would be detrimental to them and would not be able to earn even if they did not do their basic work. Das, addressing a web seminar organized by Business Standard, said that instead of avoiding lending, banks should improve their risk management and administrative structure and bring sufficient flexibility in themselves.

Amid reports of slowdown in loan growth, Das said that the tendency to avoid risk excessively could lead to its own losses, banks would not be able to earn. Debt growth is necessary to accelerate the economy. Bankers remember the past experience and to avoid deteriorating debt, they insist that the loan should be avoided only.

Das said that there is enough scope for the bank to improve its ability to prevent frauds so that they can quickly identify vulnerabilities. The RBI governor said that overall the banking system remains strong and stable and lenders will have to develop a new model of growth in the times to come. He said that the RBI will deliberately withdraw measures related to the Kovid-19 epidemic, but that will not happen soon. He said that the government has taken steps at the financial level with a lot of responsibility, understanding and thinking against the epidemic.

Governor Shaktikanta Das said that the debt resolution framework is expected to provide durable relief to the borrowers facing Kovid-19 constraints. He said that after the prevention of the epidemic, the economy must move forward with caution to get on the path of strengthening, while at the same time the financial sector should return to normalcy. Das clarified that overall, the banking sector remains consistently strong and stable. Consolidation of public sector banks is a step in the right direction, size of banks is necessary, but efficiency is more important. The governor said that there is a lot of scope for reforms to avoid fraud in banks.

This post was published on August 27, 2020 2:12 pm

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