In Mumbai (Maharashtra) [India], RBI Governor Shaktikanta Das said on Thursday that the Indian financial system is in a "much stronger position", characterized by strong capital adequacy, low levels of non-performing assets and healthy profitability of banks and non-financial companies. -bank lenders.
Underscoring the imperative of fostering a future-ready ethos within the financial sector, Das also highlighted the critical role of timely supervisory intervention in mitigating systemic risks.
The RBI governor said this while delivering a speech at the inaugural Global Conference on Financial Resilience organized by the College of Supervisors at the IGIDR Campus in Mumbai. "India's domestic financial system is now in a much stronger position than before entering the COVID crisis period. The Indian financial system is now in a much stronger position, characterized by strong capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-performing lenders. i.e. NBFCs," he said.
He added: "I would like to congratulate the banks and other entities in the financial sector for such a stellar performance in the year that just ended on March 31. There is absolutely no room for complacency because the world is changing, the challenges are to come, the complexities are growing, and problems can originate in any corner of the financial system within the country, or the world, due to something that may have no relation to you and me..."
Governor Das began by referring to global bank failures, including those in the United States, and the challenges faced by institutions such as Credit Suisse, emphasizing the lessons learned from such incidents. He acknowledged the detailed analysis carried out by the US Federal Reserve on the bank failures and highlighted the importance of proactive regulatory measures to prevent crises.
Highlighting the RBI's proactive approach, Governor Das cited Yes Bank's crisis intervention as a testimony to the central bank's ability to preemptively address financial instability.
He pointed out the advantages of the RBI's integrated approach in leveraging various facets of banking operations to manage crises effectively. Addressing the various origins of financial crises, Governor Das identified internal deficiencies within organizations, external factors such as change climate, technological disruptions and undetected fraud as possible catalysts.
He emphasized the need for supervisors to improve their methods and align them with stress scenarios that evolve over time.
Governor Das outlined the RBI's recent supervisory initiatives, including moderating unsecured lending and reducing bank exposure to non-banking financial companies (NBFCs), with an aim to stay ahead of future risks. Das said: " Fortunately, all stakeholders in India namely the Reserve Bank, banks and non-banking financial companies (NBFCs) and the government have made tangible efforts in this direction. India's domestic market is now in a much stronger position, characterized by strong capital adequacy, low levels of non-performing assets and healthy profitability of banks and NBFCs."
He highlighted the importance of continued vigilance despite the current sectoral stability, and urged financial institutions to embrace technological advancements while maintaining strong governance and ethical standards.
He highlighted the critical role of AI and machine learning in fraud prevention and operational efficiency, underlining the need for secure technology integrations aligned with business objectives. Das said: "AI and machine learning can improve predictive analytics and "Enable banks and NBFCs to identify potential risks and trends more accurately. These technologies can improve fraud detection by recognizing unusual patterns and transactions in real time. Therefore, they can protect institutions and their customers." of financial crimes and fraud."
He further added: "Operational efficiency can be improved by automating routine tasks, reducing human error and freeing up resources for more strategic activities. Robotic process automation (RPA) can handle high-volume, repetitive tasks such as data entry and processing, faster and more accurate than humans."
Looking ahead, Governor Das highlighted the RBI's commitment to regulatory stability, emphasizing a thematic and activity-based approach to supervision. He highlighted the RBI's efforts to establish a unified supervision department and engage senior officials to foster closer collaboration with bank boards of directors.
Governor Das expressed the RBI's ambition to position itself as a model for emerging economies, advocating for a holistic and customer-centric regulatory framework as the RBI approaches its centenary.
Governor Das emphasized the ongoing initiatives of the RBI, including the creation of a unified supervision department and adoption of unconventional methods to improve regulatory effectiveness. He highlighted the proactive engagement of senior officials at the CEO level with the boards of directors. of banks to reinforce RBI's supervisory priorities.
Governor Das reiterated the RBI's vision for its centenary, with the aim of positioning the institution as a benchmark for the Global South through a holistic and customer-centric regulatory framework.
These initiatives underline the RBI's commitment to fostering financial resilience and maintaining high standards of governance in the dynamic global financial landscape.
Underscoring the imperative of fostering a future-ready ethos within the financial sector, Das also highlighted the critical role of timely supervisory intervention in mitigating systemic risks.
The RBI governor said this while delivering a speech at the inaugural Global Conference on Financial Resilience organized by the College of Supervisors at the IGIDR Campus in Mumbai. "India's domestic financial system is now in a much stronger position than before entering the COVID crisis period. The Indian financial system is now in a much stronger position, characterized by strong capital adequacy, low levels of non-performing assets, and healthy profitability of banks and non-performing lenders. i.e. NBFCs," he said.
He added: "I would like to congratulate the banks and other entities in the financial sector for such a stellar performance in the year that just ended on March 31. There is absolutely no room for complacency because the world is changing, the challenges are to come, the complexities are growing, and problems can originate in any corner of the financial system within the country, or the world, due to something that may have no relation to you and me..."
Governor Das began by referring to global bank failures, including those in the United States, and the challenges faced by institutions such as Credit Suisse, emphasizing the lessons learned from such incidents. He acknowledged the detailed analysis carried out by the US Federal Reserve on the bank failures and highlighted the importance of proactive regulatory measures to prevent crises.
Highlighting the RBI's proactive approach, Governor Das cited Yes Bank's crisis intervention as a testimony to the central bank's ability to preemptively address financial instability.
He pointed out the advantages of the RBI's integrated approach in leveraging various facets of banking operations to manage crises effectively. Addressing the various origins of financial crises, Governor Das identified internal deficiencies within organizations, external factors such as change climate, technological disruptions and undetected fraud as possible catalysts.
He emphasized the need for supervisors to improve their methods and align them with stress scenarios that evolve over time.
Governor Das outlined the RBI's recent supervisory initiatives, including moderating unsecured lending and reducing bank exposure to non-banking financial companies (NBFCs), with an aim to stay ahead of future risks. Das said: " Fortunately, all stakeholders in India namely the Reserve Bank, banks and non-banking financial companies (NBFCs) and the government have made tangible efforts in this direction. India's domestic market is now in a much stronger position, characterized by strong capital adequacy, low levels of non-performing assets and healthy profitability of banks and NBFCs."
He highlighted the importance of continued vigilance despite the current sectoral stability, and urged financial institutions to embrace technological advancements while maintaining strong governance and ethical standards.
He highlighted the critical role of AI and machine learning in fraud prevention and operational efficiency, underlining the need for secure technology integrations aligned with business objectives. Das said: "AI and machine learning can improve predictive analytics and "Enable banks and NBFCs to identify potential risks and trends more accurately. These technologies can improve fraud detection by recognizing unusual patterns and transactions in real time. Therefore, they can protect institutions and their customers." of financial crimes and fraud."
He further added: "Operational efficiency can be improved by automating routine tasks, reducing human error and freeing up resources for more strategic activities. Robotic process automation (RPA) can handle high-volume, repetitive tasks such as data entry and processing, faster and more accurate than humans."
Looking ahead, Governor Das highlighted the RBI's commitment to regulatory stability, emphasizing a thematic and activity-based approach to supervision. He highlighted the RBI's efforts to establish a unified supervision department and engage senior officials to foster closer collaboration with bank boards of directors.
Governor Das expressed the RBI's ambition to position itself as a model for emerging economies, advocating for a holistic and customer-centric regulatory framework as the RBI approaches its centenary.
Governor Das emphasized the ongoing initiatives of the RBI, including the creation of a unified supervision department and adoption of unconventional methods to improve regulatory effectiveness. He highlighted the proactive engagement of senior officials at the CEO level with the boards of directors. of banks to reinforce RBI's supervisory priorities.
Governor Das reiterated the RBI's vision for its centenary, with the aim of positioning the institution as a benchmark for the Global South through a holistic and customer-centric regulatory framework.
These initiatives underline the RBI's commitment to fostering financial resilience and maintaining high standards of governance in the dynamic global financial landscape.
