Reserve Bank of India Governor Addresses Mint BFSI Summit on Indian Banking System Turnaround

January 11, 2024 

Keynote Address by Shri Shaktikanta Das, Governor, Reserve Bank of India - Mint BFSI Summit, Mumbai

Introduction:

Shri Shaktikanta Das, Governor of the Reserve Bank of India, delivered a keynote address at the Mint BFSI Summit, highlighting the remarkable turnaround of the Indian banking system despite recent challenges.

Challenges Faced:

Das outlined the challenges faced by the banking sector, including high non-performing assets (NPAs) and negative returns on assets and equity. He noted the impact of the COVID-19 pandemic, geopolitical conflicts, and global monetary policy tightening.

Turnaround Initiatives:

Over the last five years, Das emphasized the collaborative efforts of various stakeholders and outlined initiatives taken by the Reserve Bank and banks themselves. Key indicators such as capital adequacy, asset quality, and profitability showed improvement, signaling a resilient banking system.

Addressing Crises:

Das discussed the Reserve Bank's response to crises, starting with the Infrastructure Leasing and Financial Services (IL&FS) crisis. Flexible Inflation Targeting framework and measures like currency buy-sell swaps were implemented to maintain stability.

COVID-19 Response:

Swift responses to the COVID-19 pandemic included targeted term repo operations, reduction in cash reserve ratio, and enhanced access to marginal standing facility. Regulatory measures provided debt service relief, moratoriums, and restructuring frameworks.

Regulatory Architecture Strengthening

Das highlighted the comprehensive overhaul of the regulatory architecture, moving towards principle and activity-based approaches. Leverage ratio, large exposures framework, and guidelines for various entities were implemented to ensure uniform application of capital and liquidity requirements.

Regulatory Focus Areas:

The governor discussed key regulatory focus areas, including fostering sustainable digital lending, strengthening governance in regulated entities, reimagining regulations with a pro-customer perspective, sustainable finance initiatives, measures to develop credit markets, and macroprudential measures.

Revamping Supervisory Processes:

Structural changes in supervisory processes were implemented to enhance agility, flexibility, and specialization. A unified and harmonized supervisory approach for various entities was emphasized, with increased focus on on-site and offsite supervision, sustained capacity building, and heightened attention to IT and cybersecurity risks.

Conclusion:

Governor Das concluded by expressing confidence in India's banking system, attributing the turnaround to sustained efforts. He emphasized the importance of trust, regulatory vigilance, and ongoing efforts to strengthen India's banking and financial system.

Note: The news article summarizes key points from Shri Shaktikanta Das's keynote address at the Mint BFSI Summit on January 11, 2024.