NEW DELHI: Reserve Bank of India Governor Shaktikanta Das on Tuesday said the RBI was taking a closer look at the business models of some banks, which are ‘serving only the interest of their investors’.
“At the RBI, we have started taking a closer look on the business models and strategies of banks. Certain banks had followed the high risk and high return business strategy, with a skewed priority for serving only the interest of their investors. The active role of the Board, especially in challenging the proposals of the management, thus becomes critical,” Das said at an event hosted by the State Bank of India, without taking any names. He said some banks were doing more for shareholders than for their depositors.
“Banks have the privilege of raising deposits from the public, which also puts the onus on them to conduct their business in a very responsible manner. The Board of Directors carry the responsibility of being guardians of the trust that depositors have reposed in a bank.”
“A bank’s responsibility towards depositors should, therefore, be weighed against its responsibility towards shareholders of the bank,” Das said, adding (Some) managements and boards have become too cosy, which is not a good situation.