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Reserve Bank of India Governor Shaktikanta Das has been conferred the ‘Central Banker of the Year, Asia-Pacific 2020’ award, by The Banker magazine, for taking steps to bring banking in India up to standard via a restrained approach to governance amid banks facing a series of challenges, from non-performing loans to issues around fraud.
According to The Banker , Das has been outspoken on the lack of governance in banking, calling for tighter rules for state-owned banks, which comprise 60 per cent of India’s banking sector.
To make the banking system more robust, the central bank is to set up a college for supervisors with the aim of improving supervisory skills, the UK-based international financial affairs publication said. Sessions will be available on a continuous basis, to keep them on top of the latest developments.
The publication, which is owned by The Financial Times , said Das has brought in measures to tighten the rules around shadow banking, refusing to bail out the non-bank finance companies. He is aiming instead for issues to be managed within the financial system, possibly a risky move but one that will reduce dependence on the central bank, it added.
The Banker observed that lenders outside the traditional bank network have been placed under greater levels of scrutiny. Housing finance companies have been brought under the regulation of the RBI and will adhere to the same rules framework of non-bank finance companies.
Proactive approach
The publication noted that the central bank has also been proactive in providing assistance to India’s smaller banks. As the threat from newer micro-finance institutions looms, Das moved to help the country’s urban cooperative banks install a robust IT system that will allow them to offer banking services at a lower cost and with safeguards to protect the customer, it added.
Repeated economic slumps saw the central bank cut interest rates five times during 2019, and it was open to cutting them again if necessary, The Banker said.
The central bank has also mandated banks to offer benchmark-linked lending rates, with most choosing to follow the RBI’s 5.15 per cent repo rate.
The publication quoted Das as saying: “An environment of macroeconomic stability, as reflected in low and stable inflation, notwithstanding its recent spike that is expected to be transient; a sustainable current account deficit; and rising foreign exchange reserves have contributed towards maintaining financial stability and laying a platform for sustained growth.”
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