The Reserve Bank of India (RBI) will revise guidelines for bank boards to ensure they focus more on policy and strategic matters rather than routine operational issues, Governor Sanjay Malhotra said on Wednesday.
Malhotra said several bank boards informed the RBI that operational matters were increasingly coming before them, limiting their ability to concentrate on core policy decisions. He said the central bank has taken up the issue to help boards prioritise governance and long-term strategy.
After announcing the monetary policy, Malhotra said India’s banking regulations remain robust and adequate. He added that the RBI continues to monitor developments closely and addresses specific concerns on a case-by-case basis.
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RBI Says Banking System Remains Strong Amid Recent Developments
The move follows recent developments at HDFC Bank, where then Chairman Atanu Chakraborty resigned citing differences over “values and ethics.” Other lenders, including IDFC FIRST Bank and IndusInd Bank, have also faced scrutiny over various challenges.
Malhotra reassured stakeholders that India’s banking system remains resilient and well-regulated. He highlighted strong frameworks governing conduct, governance, prudence and liquidity, along with active supervision by the central bank and support from law enforcement agencies where required.
Deputy Governor Swaminathan Janakiraman said these developments are entity-specific and do not pose any systemic risk. He added that the RBI handles such matters bilaterally as they arise.
SEBI Pushes Stronger Corporate Governance, RBI Calls Forex Curbs Temporary
Separately, Securities and Exchange Board of India (SEBI) Chairman Tuhin Kanta Pandey recently announced plans for a joint initiative to strengthen the capacity of independent directors and improve corporate governance. He said independent directors must go beyond compliance and actively support management with accountability and solutions.
The RBI also clarified that recent curbs on banks’ foreign exchange activities were temporary steps to curb excessive market volatility. Malhotra said the central bank observed heightened volatility in late March, with arbitrage positions building up between non-deliverable and deliverable markets. He added that the RBI may roll back these measures once market conditions stabilise.
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