Never miss a great news story!
Get instant notifications from Economic Times
AllowNot now


You can switch off notifications anytime using browser settings.
11,921.50-96.9
Stock Analysis, IPO, Mutual Funds, Bonds & More

RBI’s Shaktikanta Das calls for tighter governance at Indian state-run banks

Describing the lack of strict norms as the "elephant in the room", he said this had led to all sorts of ills.

Bloomberg|
Updated: Nov 16, 2019, 08.50 PM IST
0Comments
BCCL
shaktikanta-das-bccl
Das said that while the number of NPAs has declined recently, the provision coverage ratio has increased to 60.5% from 48.3% a year ago.
India’s central bank chief Shaktikanta Das called for stronger corporate governance at state-run lenders to make the country’s banking sector more efficient.

Describing the lack of strict governance as the “elephant in the room,” Das said this had led to elevated levels of non-performing assets, capital shortfalls, fraud and inadequate risk management.

“The role of independent boards in fostering a compliance culture by establishing the proper systems of control, audit and distinct reporting of business and risk management has been found wanting in some public-sector banks leading to build-up of NPAs,” Das told an audience in the western Indian city of Ahmedabad.

banking-stress


State-run lenders control about 60% of India’s banking industry. They are owned by the government, with the Reserve Bank of India having limited supervision and legal powers to bring about changes in management, unlike privately-owned ones over which is holds more sway. That creates an uneven playing field leading to question marks about the efficacy of central bank regulations over state-run institutions.

India’s banking sector has the highest ratio of stressed assets in the world, with many bad loans to companies in sectors such as energy and steel. A crisis in shadow banking has also raised further concern that banks, which have 7% of their loans to non-banking finance companies, will face a fresh spate of debt defaults.

Das said that while the number of NPAs has declined recently, the provision coverage ratio has increased to 60.5% from 48.3% a year ago. The capital adequacy ratio in the banking system has also climbed to above the Basel requirements, he said.

Also Read

Growth a national objective: Shaktikanta Das

Good coordination with government on policy measures: Shaktikanta Das

Shaktikanta Das faces an increasingly tough balancing act

Forensic audit on PMC scam expected by month-end: Shaktikanta Das

Why RBI stayed put on policy rates? Shaktikanta Das explains

Comments
Add Your Comments
Commenting feature is disabled in your country/region.
Download The Economic Times Business News App for the Latest News in Business, Sensex, Stock Market Updates & More.

Other useful Links


Follow us on


Download et app


Copyright © 2019 Bennett, Coleman & Co. Ltd. All rights reserved. For reprint rights: Times Syndication Service