RBI Governor urges banks to stay vigilant against risks

Reserve Bank of India (RBI) Governor Shaktikanta Das underscored the importance for banks to maintain heightened vigilance against potential risks within the banking system, stressing that there is no room for complacency, during meetings with Managing Directors and CEOs of public and private sector banks.

In his interactions, Governor Das commended banks for their enhanced financial performance, highlighting the overall resilience of the banking sector. However, he cautioned against any lapse in vigilance and urged banks to remain alert to any emerging risks.

The RBI statement acknowledged the robustness of domestic financial institutions' balance sheets but stressed on the necessity for continued diligence in identifying and mitigating risks. Governor Das raised concerns regarding various issues including the sustainability of business models, surges in personal loans, adherence to co-lending guidelines, bank exposure to the Non-Banking Financial Company (NBFC) sector, and effective management of liquidity risks.

Additionally, discussions encompassed topics such as IT and cyber security preparedness, operational resilience, combating digital fraud, and enhancing internal rating frameworks. Governor Das emphasized the paramount importance of a robust customer grievance redressal mechanism and the protection of customers' interests to uphold the safety and stability of the financial system.

Banks were encouraged to actively engage in RBI's fintech initiatives and further bolster Digital Banking Units (DBUs) to foster digital innovation and enhance customer experiences.