RBI closely monitoring risks in banking system, says top official

The Reserve Bank of India (RBI) is closely monitoring risks in the banking system, the central bank's Deputy Governor M. Rajeshwar Rao said.

"RBI will continue to rationalise and wherever required, reinforce prudential regulations to ensure that banks recognise risks in their balance sheets and proactively manage them," Rao said during at the India Investment Summit & Awards organised by Mint in Mumbai on March 30, according to a transcript of his speech that was released on April 2.

Rao further said another area of focus is on improving governance in the regulated entities. “If one were to choose a single expression that epitomizes banking business, it has to be ‘risk management’,” Rao added.

Rao also said that increasing dependency of NBFCs on bank borrowings was
leading to regulatory concerns. Although asset quality at broader portfolio level was not exhibiting any major signs of stress, the consistent high credit growth reported in the above segments warranted regulatory intervention.