India Banking Sector stands out as strong and stable: RBI Chief

INDIA ECONOMY: Shaktikanta Das, Governor of the Reserve Bank of India said, the Indian banking industry "stands out as strong and stable" in the face of enormous stress brought on by the CoVid outbreak, the ongoing war in Europe, and the banking crisis in several industrialised economies.

 "Today our banking sector stands out as strong and stable with CRAR (capital-to-risk weighted assets ratio) at 16.1 percent, gross NPA (non-performing asset) at 4.41 percent, net NPA at 1.16 percent, and provision coverage ratio at 73.20 percent at the end of December." 

The conference was titled, ''Governance in Banks: Driving Sustainable Growth & Stability'. Capital-To-Risk Weighted Assets Ratio is the ratio that compares capital to risk-weighted assets and is watched by regulators to decide a bank's risk of failure.

The Governor acknowledged the important role that banks had played, saying, "Over the years and especially in the recent period, banks have been able to maintain financial and operational resilience in the face of extreme stress originating from the COVID-19 pandemic, the ongoing war in Europe, and the banking sector crisis in certain advanced economies (AEs)." In such circumstances, complacency may develop, according to Das.

He said, "Therefore, boards of directors of Banks and their senior management should maintain a constant vigil on external risks and build-up of internal vulnerabilities, if any." "We have to bear in mind that risks often get overlooked or forgotten when things are going well," he said. The governor of the Reserve Bank stated that over the past few years, regulation and oversight of the whole financial industry have been greatly reinforced by the Reserve Bank.

The RBI Governor said that the central bank released rules for bank governance and streamlined the regulatory framework for banks, NBFCs, including microfinance organisations (MFIs), and urban cooperative banks (UCBs). "Our supervisory methods and approach have gotten considerably stronger and more in-depth. The governor stated, "As you are aware, banks do their business primarily with depositors' money and it is, therefore, the responsibility of Boards of Directors and Management of Banks to keep the interest of depositors uppermost in their mind. Our priority is the protection of depositors' money and ensuring a robust financial sector for the country to progress. 

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