MUMBAI: Stressing on the need for effective governance, the Reserve Bank governor, Shaktikanta Das, has warned against perfunctory compliance with regulations saying that it will only lead to self-defeat.
He also advised regulatory supervisors as well as regulated entities not to become complacent with the improvement in the health of the financial institutions, saying in today’s turbulent times, it’s important for the financial sector to follow an adaptive and forward-looking approach to navigate emerging challenges.
“Perfunctory compliance with regulations would actually be self-defeating”, Das said on Thursday while delivering the second global conference on financial sector resilience, organised by the RBI-run College of Supervisors here.
“In today’s environment that’s characterised by turbulent global spillovers and uncertainties, it’s important for the financial sector to navigate amid the emerging challenges. This would entail strengthening governance and risk management practices, employing sustainable business models, and embracing technological advances and using them to our advantage,” he said.
The governor said gross non-performing assets ratio of banks was 2.74 as of March 2024, down from 3.87 in March 2023 and 5.82 in March 2022. Similarly, for NBFCs these ratios stood at 3.96 as of March 2024, down from 5.03 in March 2023, and 6.29 in March 2022.
Das said strong governance is at the core of financial sector resilience. It’s in fact the bedrock for informed and strategic decisions that align with long-term goals and risk management principles.