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RBI tells banks to deliberate on 7 themes prescribed by PJ Nayak panel

MUMBAI: The Reserve Bank of India on Thursday directed bank boards to deliberate on seven critical themes including business strategy, risk, financial report and their integrity, customer protection, financial inclusion and human resources as prescribed by the P J Nayak committee. The central bank in its first bi-monthly monetary policy statement had proposed to do away with the calendar of reviews and instead, replace it with the seven critical themes.

The banks would as part of business strategy would have to discuss the development of new products, competitiveness of individual businesses and review businesses in relation to targets. Risk management policies concerning credit, operational, market, liquidity risks, assessing the independence of the risk function, said the RBI. The boards of banks would have to conduct a detail scrutiny of the quarterly and annual financial results, review NPA management and reported NPA and provisioning integrity.

On compliance the boards would have to review if the bank is adhering to regulatory requirements, following RBI and SEBI norms and reviewing observations from the annual financial inspection by RBI.

To ensure protection of consumer interests the RBI has asked boards to review any instances of mis-selling, particularly third-party products, laying down the appropriateness of products to different customer segments, understanding the broad trends and concentration in the growth of customer grievances and their resolution.

The RBI and government has been pushing bank to promote financial inclusion, it has thus asked bank boards to review priority sector lending, payments for the disadvantaged, deposit mobilisation from weaker sections and support to microfinance institutions. The boards of banks would also have to review the appointments and approvals of directors, perks and perquisites for employees, incentive schemes for employees, promotion policies for employees and discuss training and skill development of employees.
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