RBI now looking at business models of banks: Governor Shaktikanta Das

Supervision of banks by RBI has deepened and intensified over the last 3-4 years, with the central bank now also looking at the business models of banks on an ongoing basis, Governor Shaktikanta Das said.

“We are now looking at business models of banks. For example, if we find that the unsecured retail portfolio or loans are rising very fast and they occupy a larger space in the entire lending portfolio of the bank, we immediately flag our concern to the bank,” Das said at the BFSI Insight Summit organised by a financial publication.

Reserve Bank of India (RBI) flags its concerns to the board or risk management committee of the banks and leaves the matter to them, without interfering in the bank’s operations, he said, when asked on reports of increasing micromanagement in supervision by RBI.

“Our effort is to ensure that the banking system is robust and stable. It is nobody’s intention to do micro- or macro-management of banks. We don’t interfere in that at all, but we keep on raising (concerns) wherever we feel some signs of worry or discomfort,” Das said.

Supervision by RBI is no more a year-end exercise but an ongoing, round the year exercise, Das said adding that the central bank follows a consultative approach to raise these points with the banks on an ongoing basis.

“In India, failure of banks is not acceptable by the public or anyone and everyone looks at RBI. So it is our responsibility, as the regulator and supervisor of the banking system, to ensure that the banking system is safe, robust and ready to cater to the emerging requirements of the Indian economy.”