The governor of the Reserve Bank of India (RBI) held meetings with the chiefs of public sector banks and some private banks on Tuesday and Wednesday, respectively, through video conference. At the meetings, governor Shaktikanta Das asked banks to strengthen their capital and provisioning positions, as also their ability to lend and contribute to financial stability.
The meetings were also attended by deputy governors of RBI. In his opening remarks, Das touched upon the current economic situation and emphasised the importance of the banking sector in supporting the ongoing revival in economic activities.
“With specific reference to the financial sector, he highlighted the measures taken by the RBI since the onset of the pandemic to stabilise the economy and to ensure financial stability. With regard to the banking sector, he reiterated the need for banks to remain vigilant and take proactive measures to strengthen their resilience and lending capacity by raising capital and making provisions proactively,” said a statement on the RBI website.
The other issues discussed in the meeting included an assessment of the current economic situation and outlook, monetary policy transmission and the liquidity situation, credit flows to different sectors of the economy, including stressed sectors and MSMEs, and progress in the implementation of the resolution framework for Covid-related stressed assets.
Progress made in making the identified districts in states and union territories (UTs) 100% digitally enabled, strengthening and enhancing the capacity and efficiency of the IT infrastructure and IT systems in banks and focussed attention on improving grievance redress mechanisms in banks were also discussed.
All of these have of late been areas of concern for the regulator. For instance, during the last monetary policy announcement, governor Das had said that with a view to enhance the efficacy of the grievance redress mechanism in banks, it will put in place a comprehensive framework comprising enhanced disclosures on customer complaints and monetary disincentives in the form of recovery of cost of redress of complaints.
In a recent speech, he said that financial inclusion in the country is poised to grow exponentially with digital savvy millennials joining the workforce, social media blurring the urban-rural divide and technology shaping policy interventions.
“Going forward, harnessing the near universal reach of bank accounts across the length and breadth of the country, there needs to be greater focus on penetration of sustainable credit, investment, insurance and pension products by addressing demand side constraints with enhanced customer protection,” he said.
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