The new world of public interest directors

In his twin interactions with bank boards, RBI governor did not ask them to maximise profits or shareholder value. He instead urged them to prioritise the stability and growth of the financial system

For companies, the best time to borrow money is when they don’t need to. For banks, the best time to accumulate capital and strengthen processes is when times are good. It is this thinking that prompted Reserve Bank of India Governor Shaktikanta Das to hold twin interactions on governance in banks. The first of these was with the boards of public sector banks, and a week later, with the boards of private sector banks. He reminded the boards that “risks often get overlooked or forgotten when things are going well.” Banks currently have a capital adequacy ratio of 16.1 per