The Reserve Bank of India (RBI) has started to monitor the business models of banks more closely, said RBI governor Shaktikanta Das on Thursday, while speaking at the Global Conference on Financial Resilience.
The recent stress tests revealed that the Indian banks were efficient and will be able to maintain capital adequacy above minimum requirement even in situation of severe distress.
The RBI has put in place various frameworks to monitor the banks and has also deployed macroprudential measures to assess system level buildup of risks, highlighted Das in his speech.
While talking about the recent events in banking landscape in US and Europe, he said, the banks and other financial institutions need to be organizationally resilient. “The organisations must have capacity to protect themselves from adverse incidents.”
“We expect banks and managements to continually assess financial risks and build buffers beyond minimum regulatory requirement,” he added.
During his speech, the RBI governor also mentioned that Indian banking system has remained resilient and has not been impacted adversely by the global events.
He, however, said that financial sector surprises can come from anywhere at a time when participants world over are adopting unconventional policies, and urged the stakeholders to be watchful.
The Ministry of Finance in its monthly review report had also stated that India’s banking system is considerably less prone to collapses similar to that of a few banks in the US and Europe.
“A discussion of what caused the collapses overseas is beyond our remit but we will confine to restating the factors that make the Indian banking system considerably less prone to such developments in the near-to-medium term future,” said the report.
Banking supervision in India is robust with the RBI’s coverage of institutions, regardless of asset size and macro stress tests are also performed from time to time on individual banks, the finance ministry had said earlier this week.
“RBI remains committed for future proofing of Indian financial system, and to provide support for its sustainable growth,” said governor Das.