Important to adhere to governance norms: CEA

Chief Economic Advisor (CEA) Krishnamurthy Subramanian on Friday said it is important for the banks to adhere to governance norms, but it should also be ensured that bad judgment is not read as malafide intent.

"Banks must not pace at a break-neck speed and then hit a speed breaker," Subramanian said at a banking event here though he clarified that he made the statement in a broader sense.

The CEA said the government has already taken several steps to improve the governance of banks to ensure that the earlier mistakes do not occur again.

Asked on the implementation of the P.J. Nayak Committee report on banking governance, he said it is premature to comment on its recommendations.

The CEA cautioned that while looking at governance issues, one has to be very careful to ensure that bad judgment is not read as 'malafide' intent.

Former RBI Governor Raghuram Rajan had constituted the P.J. Nayak Committee in 2014 to look into governance issues.

"We have to be careful as bad judgments can occur sometimes because banking as an activity involves risks. We must ensure that a bad judgment is not read as malafide intent and that's where the Prevention of Corruption Act (PCA) has been modified to take things forward," Subramanian said.

--IANS

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