Several challenges in the banking sector still remain to be addressed, particularly with regard to stressed asset resolution and credit flows to the needy sectors, according to Reserve Bank of India Governor Shaktikanta Das, even as he acknowledged discernible improvements in the sector.

At a meeting with public sector bank chiefs and Indian Banks’ Association Chief Executive, several issues — including giving impetus to resolution of stressed assets facilitated by revised (prudential) framework for resolution announced by the RBI on June 7, 2019; and flow of credit to needy sectors while following prudent lending, with robust risk assessment and monitoring standards — were discussed.

Transmission of rates

The other issues that were discussed related to less than desired level of transmission of monetary policy rates, credit and deposit growth on the back of a slowing economy, recent initiatives to address issues relating to non-banking financial companies (NBFCs) and the role banks can play in mitigating lingering concerns, improving recovery efforts, strengthening internal control mechanism for improved fraud risk management, and strengthening digital payments.

With the Governor underlining the importance of expanding and boosting the digital payments ecosystem, it was agreed that banks will identify one district in each State to make it 100 per cent digitally-enabled within a time-frame of one year in close co-ordination and collaboration with all stakeholders, including State Level Bankers’ Committees, State Governments, and Regional offices of RBI, among others.

To the extent feasible, such districts may be converged with the ‘Transformation of Aspirational Districts’ programme of the Union government.

The Indian Banks’ Association is expected to play a catalytic role in this regard.

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