RBI advises banks to have forward-looking perspective of risks

The Conference included technical sessions on the three Assurance Functions by the Chief General Managers of the Reserve Bank and Presentations on Best Practices by Heads of Assurance Functions of select SCBs

The Reserve Bank of India (RBI) advised banks to have a forward-looking perspective of risks and initiate pre-emptive measures to mitigate risks. The central bank also asserted that supervision is effective when supported by effective assurance functions.

Deputy governors M Rajeshwar Rao and Swaminathan J addressed the Heads of Assurance Functions (i.e., Chief Compliance Officers, Chief Risk Officers and Heads of Internal Audit) of all Scheduled Commercial Banks (SCBs) in a conference in Mumbai on January 10. The theme of the Conference was ‘Resilient Financial System – Role of Effective Assurance Functions’.

“In his keynote address, deputy governor M Rajeshwar Rao outlined the regulatory expectations from the assurance functions and urged them to have a forward-looking perspective of risks and initiate pre-emptive measures to mitigate risks,” RBI said in a press release.

Deputy Governor Swaminathan J outlined the Reserve Bank’s supervisory expectations and asserted that supervision is effective when supported by effective assurance functions.

“This is part of the series of supervisory engagements kicked-off by the Governor in May 2023 with the Conference for the Directors of Public and Private Sector Banks on the theme of ‘Governance in Banks – Driving Sustainable Growth and Stability,” the RBI said.

DG Rao further exhorted banks to work in collaboration with each other and avoid silos within the banks to provide a holistic assurance to stakeholders. DG Swaminathan urged banks to play the role of conscience keepers of their institutions, maintain strong independence and a proactive alert stance to identify and mitigate emerging risks to ensure the stability of the financial institutions and the resilience of the broader financial system.