'Effective governance, compliance practices essential in safeguarding bank's interests'

Reserve Bank of India

The Reserve Bank of India (RBI) Deputy Governor MK Jain said in order safeguard bank’s reputation, financial stability, and long-term viability, there is need of effective management, governance, and compliance practices.

Moreover, the board must ensure that the bank's business model, strategy, and operations are sustainable and create long-term value for all stakeholders, he added.

“Finally, the board must remain vigilant, adaptive, and continuously assess the bank's performance, risks, and opportunities, and take timely and informed decisions.,” Jain said.

M K Jain delivered a speech at the Conference of Directors of Banks, organised by the RBI for Public Sector Banks on May 22 in New Delhi and Private Sector Banks on May 29 in Mumbai.

He further said they urge all Board members to embrace these principles to drive the bank towards sustainable growth and stability, while safeguarding the interests of depositors and maintaining the stability and integrity of the banking system all the time.

In the past five years, there has been a significant strengthening of the
Reserve Bank's supervisory systems and shifting from an entity-based
approach to a more thematic and activity-based approach.

Structural changes have been implemented to enhance agility, flexibility, and specialization.

"A unified and harmonized supervisory approach has been adopted for
commercial banks, NBFCs, and urban cooperative banks (UCBs), with a
greater focus on identifying the root causes of vulnerabilities," Jain said.

Preparing for the Future

Indian banks needs to focus on digital transformation, enhance customer experience, adopt innovative technologies such as AI and blockchain, invest in cybersecurity measures, Jain said in a speech.

He further said banks need to look for opportunities to derive synergistic benefits through collaboration with other players as well as upskilling their workforce to meet the demands of the digital era.

“They will need to prioritize risk management, regulatory compliance, and sustainability to ensure long-term resilience and competitiveness in the evolving banking landscape,” Jain said.