India’s central bank has called a meeting with the board of directors of all public sector banks (PSBs) on May 22, 2023, in New Delhi to discuss issues related to governance and ethics, sources told Moneycontrol.
“This meeting has been called for the directors of PSBs to discuss issues related to governance, ethics and the role of boards,” said one of the persons quoted.
Another source who is familiar with the matter told Moneycontrol that, along with RBI Governor Shaktikanta Das, RBI deputy governors, executive directors from its Department of Regulation as well as Supervision are predicted to be present in that meeting.
“Ethics is extremely important from the bank’s point of view, especially after the global financial crises. Some reports in the past have highlighted that conduct of financial institutions has led them into crises due to a lack of ethics,” said former RBI Deputy Governor Shyamala Gopinath to Moneycontrol.
Unethical practices like misselling have been raised in the past meetings with the banks as well, Gopinath added.
Bank executives, especially from public sector banks (PSBs), have been facing immense pressure from top management to sell third-party products like insurance. Failure to meet targets invites informal penal actions while meeting targets brings perks such as parties in five-star resorts, several bankers told Moneycontrol on the condition of anonymity.
On April 3, 2023, in an exclusive interview with Moneycontrol, UCO Bank MD & CEO Soma Sankara Prasad said that selling insurance products should be done ethically.
“There’s we should take care to ensure that there is no misselling and we don’t sell a product, which is not appropriate for a particular customer,” Prasad told to Moneycontrol.
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