Mumbai: RBI Governor Shaktikanta Das, in a proactive move, urged banks on Wednesday to maintain a vigilant stance against potential risks within the banking system. Addressing MDs and CEOs of public and select private sector banks, Das underscored the importance of staying proactive in risk management to uphold financial stability.Enhanced financial performance acknowledgedIn a statement released by the Reserve Bank of India (RBI), Governor Das commended banks for their improved financial performance, which has positively impacted the overall banking sector. Despite the resilience demonstrated by the domestic financial system and the healthy balance sheets of banks, Das stressed the necessity of sustained vigilance to mitigate risks effectively.Key areas of focusDas raised several crucial areas of concern during the meetings, including:Business model viability: Examining the sustainability of existing business models.Personal loan growth: Addressing concerns regarding outlier growth in personal loans.Adherence to co-lending guidelines: Ensuring compliance with co-lending guidelines.Bank exposure to NBFC sector: Assessing banks exposure to the Non-Banking Financial Company (NBFC) sector.Liquidity Risk Management: Strengthening liquidity risk management practices.Additionally, discussions encompassed topics related to IT and cyber security preparedness, operational resilience, digital fraud prevention, and the reinforcement of internal rating frameworks.Customer protection and fintech initiativesGovernor Das emphasized the paramount importance of robust customer grievance redressal mechanisms and the protection of customers interests. He highlighted these as essential components for ensuring the safety and stability of the financial system and individual financial institutions.Furthermore, banks were encouraged to actively engage in RBIs fintech initiatives and bolster their Digital Banking Units (DBUs) to enhance digital banking services for customers.The meetings, attended by Deputy Governors M Rajeshwar Rao and Swaminathan J, along with executive directors overseeing regulation and supervision functions, underscored the RBIs commitment to fostering a resilient and robust banking ecosystem.
