Mumbai: The banking sector, which is at an all-time high in terms of financial parameters, is ready to support the growth of the Indian economy, Reserve Bank Deputy Governor Swaminathan J said on Tuesday.
Addressing a conference of statutory auditors and chief financial officers of commercial banks and all financial institutions in India here, the lieutenant governor also said that the Reserve Bank of India (RBI) has undertaken several initiatives to improve the effectiveness of the audit process.
These include structured meeting mechanisms between supervisory teams and auditors, the introduction of exception reporting, the simplification of processes for the appointment of auditors and other measures designed to safeguard the independence of auditors.
"Auditors must apply due rigor in their audit processes to mitigate any potential for divergence, underprovision or non-compliance with legal and regulatory requirements. Additionally, a critical aspect of the auditor's role is the careful evaluation of internal financial controls over finances. report," he said.
By maintaining meticulous standards and complying with regulatory guidelines as well as auditing standards, auditors can minimize the need for supervisors to intervene, Swaminathan added.
While he highlighted the expectations of auditors to help ensure sound financial supervision and regulatory compliance, he said they can play an important role in identifying and timely reporting of incipient vulnerabilities to both the bank's management and the RBI.
"I would like to mention that today the banking sector is at its highest point for a decade in terms of all the financial parameters that we monitor, and the sector is well positioned to support the growth of the Indian economy. But we have a shared responsibility to ensure that the same is sustainable over the years,” he said.
Therefore, the lieutenant governor said today's conference underscores the indispensable partnership between auditors, chief financial officers and financial sector regulators to safeguard the integrity and stability of our financial institutions.
He also emphasized the need to maintain the highest standards of transparency, diligence and professionalism to foster trust among stakeholders and ensure the continued resilience of our banking system.
According to the RBI's latest Financial Stability Report, commercial banks' gross bad assets or doubtful assets fell to a 12-year low of 2.8 per cent in March 2024 and may further decline to 2.5 per cent by end of the current fiscal year.
Addressing a conference of statutory auditors and chief financial officers of commercial banks and all financial institutions in India here, the lieutenant governor also said that the Reserve Bank of India (RBI) has undertaken several initiatives to improve the effectiveness of the audit process.
These include structured meeting mechanisms between supervisory teams and auditors, the introduction of exception reporting, the simplification of processes for the appointment of auditors and other measures designed to safeguard the independence of auditors.
"Auditors must apply due rigor in their audit processes to mitigate any potential for divergence, underprovision or non-compliance with legal and regulatory requirements. Additionally, a critical aspect of the auditor's role is the careful evaluation of internal financial controls over finances. report," he said.
By maintaining meticulous standards and complying with regulatory guidelines as well as auditing standards, auditors can minimize the need for supervisors to intervene, Swaminathan added.
While he highlighted the expectations of auditors to help ensure sound financial supervision and regulatory compliance, he said they can play an important role in identifying and timely reporting of incipient vulnerabilities to both the bank's management and the RBI.
"I would like to mention that today the banking sector is at its highest point for a decade in terms of all the financial parameters that we monitor, and the sector is well positioned to support the growth of the Indian economy. But we have a shared responsibility to ensure that the same is sustainable over the years,” he said.
Therefore, the lieutenant governor said today's conference underscores the indispensable partnership between auditors, chief financial officers and financial sector regulators to safeguard the integrity and stability of our financial institutions.
He also emphasized the need to maintain the highest standards of transparency, diligence and professionalism to foster trust among stakeholders and ensure the continued resilience of our banking system.
According to the RBI's latest Financial Stability Report, commercial banks' gross bad assets or doubtful assets fell to a 12-year low of 2.8 per cent in March 2024 and may further decline to 2.5 per cent by end of the current fiscal year.