The regulator should be worried about profitability of banks as profits contribute to their net worth and profits ploughed back into the business provide them the capital to lend further, according to SS Mundra, Deputy Governor, RBI.

Speaking at a FICCI-IBA banking summit in Mumbai on Tuesday, Mundra said fresh non-performing asset (NPA) accretion by banks in the last quarter was lesser than before and recovery efforts by banks had been much better.

Mundra said: “It has been a mixed performance by banks, for some it seems the worst is over, for some it seems they are still in the midst of it.”

He felt that credit resolution could not be outsourced to third parties by banks. They still had to have such cases under their control to ensure proper resolution.

Progress on S4A

On some areas of the scheme for sustainable structuring of stressed assets (S4A) being reworked, Mundra said that the RBI was still deliberating on the course of action and that it was a work-in-progress.

On full-fledged savings bank (SB) account number portability, Mundra felt it was not required to be introduced specifically since the unified payments interface (UPI) had come and it was just a matter of adjustment that needed to happen.

Mis-selling of insurance

On mis-selling of insurance-related products, Mundra cautioned: “Some provisions are already there. I would tend to believe that there is scope to make it a little more stringent. The pinch should be felt harder than what is being felt now. That may require some change in legislation.”

Banking culture

Finally, on the conduct and culture required of bankers, he invoked the G-30 (of which India is also a part): “The board and the senior management need to make sure that the voices of the middle management and the echo from the bottom can be heard.”

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