RBI deputy Guv urges banks to address gaps in governance framework

MUMBAI (Reuters) – The boards of Indian banks should address gaps in governance frameworks, including ensuring appropriate risk management practices and adhering to acceptable customer and market conduct, a deputy governor of the Reserve Bank of India (RBI) said in a speech in May.

Boards should set clear expectations for management and should require reports on risk management on a regular basis, said M Rajeshwar Rao, at a conference of directors of state-run and private banks in May.

The speech was uploaded to the central bank’s website on Monday.

RBI Governor Shaktikanta Das and deputy Governor M.K. Jain also urged banks, in the same conference, to ensure compliance and effective governance.

The RBI has been increasingly encouraging banks to strengthen governance standards to avoid financial instability, following a series of bank failures in the US.

“Boards should ensure that management is transparent about the banks’ financial performance/statements and risk management practices so that trust with stakeholders is built and investors are able to assess the various risks associated with a bank,” Rao said.

(Reporting by Siddhi Nayak; Editing by Janane Venkatraman)