RBI Governor Das asks banks to step up efforts to fight digital frauds

RBI governor, deputy governor met CEOs of public sector banks, private banks

Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday met the managing directors (MDs) and chief executive officers (CEOs) of public sector banks (PSBs) and select private banks to discuss key issues.

These include persisting gap between credit and deposit growth, trends in unsecured lending, liquidity risk management and asset-liability management issues, among others, the banking regulator said in a release.

Das highlighted the importance of further strengthening governance standards, risk management practices and compliance culture in banks.

“He also emphasised the need for banks to ensure robust cybersecurity controls and effectively manage third-party risks.

He urged them to step up efforts against ‘mule accounts’ and also intensify customer awareness and education initiatives, among other measures, to curb digital frauds,” RBI said.

Das had acknowledged higher resilience and strength of the banking sector.

The banking regulator has previously cautioned banks on the high credit-deposit growth gap and had directed bank boards to re-strategise business plans.

According to the latest RBI data, credit growth stood at 19.2 per cent while deposit growth was 12.6 per cent, indicating a 660 basis points (bps) gap. The figure includes the impact of the HDFC-HDFC Bank merger.

The central bank had also increased risk weights for unsecured lending in November last year to moderate credit growth in the segment.

This action by the RBI was prompted by evidence of dilution of underwriting standards and lack of proper appraisals while giving unsecured credit. Following RBI’s action, growth in the segment has moderated to some extent.

During the meeting, the RBI management also deliberated on increasing use of the rupee for cross-border transactions. It also discussed credit flow to micro, small, and medium enterprises (MSMEs) and participation of banks in innovation activities of the central bank, the release said.

Further cyber security, third-party risks and digital frauds were also discussed during the meeting.

Das also noted that banks have shown improvement in key metrics — asset quality, loan provisioning, capital adequacy and profitability.

These meetings with the top honchos of banks are part of RBI’s ‘continuous engagement with the senior management of its regulated entities’, the central bank said.

The meetings were also attended by Deputy Governors M. Rajeshwar Rao and Swaminathan J, along with executive directors in-charge of regulation and supervision functions.