Banks should focus more on capacity building, says Gandhi

Reserve Bank of India (RBI) Deputy Governor R Gandhi has stressed on the importance of capacity building by improving human resource (HR) management practices and improving training methodologies and intervention.

" The banking sector plays a very important role in the economic growth of the country and our banking system has to ensure that its capacity to deliver has to continuously evolve and adapt to the developments in the sector. Banks have to make conscious and structured effects in building such capacity, by putting in practice the various recommendations in the report," Gandhi said at a round-table organised by the Centre for Advanced Financial Research and Learning (CAFRAL), a think-tank set up by RBI.

Gandhi was making a reference to the the Financial Sector Legislative Reforms Commission (FSLRC), established in 2011, which had made recommendations with regard to capacity building in banks and non-banks, streamlining training intervention and other related measures. Apart from FSLRC, RBI had also formed a committee in this regard under G Gopalakrishna.

The Gopalakrishna committee had also made recommendations with regard to HR management practices, training methodologies and innovations, system-wide institutions and processes, exploring mandatory certification requirements and amplifying capacity related requirements in banks' boards.

Gandhi said the process of capacity building involved more than just training. It also included human resource development, organisational development, institutional and legal framework development at the bank level.

He added that capacity building was also required at the top management level of the bank.

"The doubts have been raised on the ability of boards of banks to adequately guide and oversee their institutions... Bank boards are in constant scrutiny of the regulator, shareholders, and various stakeholders. Needless to add, directors need to possess adequate skill-sets and stay abreast of developments in the financial sector to guide banks and steer them in the right direction," he added.