Risk aversion gained’t do, RBI Governor warns banks

Mumbai, August 27

Addressing a webinar, RBI Governor Shaktikanta Das immediately requested banks to keep away from excessive danger aversion, because it was “self-defeating”. He suggested them to odor vulnerabilities early to keep away from frauds.

The feedback come within the midst of the steadily slowing credit score off-take, main many to marvel if banks have grow to be too “risk-averse” owing to their considerations over asset high quality in a pandemic-stricken economic system.

As per the RBI’s annual report launched earlier this week, frauds doubled to Rs 1.85 lakh crore in FY20.

Das warned banks that excessive danger aversion would deprive them of their revenue and create a scenario the place they might be unable to earn their bread.

He appreciated the federal government’s response to the Covid-19 disaster as being fiscally “very prudent and very calibrated”. He stated the federal government was “responsible” in asserting the measures proper from the beginning which targeted on the poor and susceptible.

He additionally welcomed the federal government’s technique of consolidating public sector banks, saying lenders with giant steadiness sheets could be useful. He, nevertheless, stated that whereas dimension was important, effectivity was “more important”. “There is no risk aversion but prudent banking. If we give money, we expect to get it back,” stated Aditya Puri, MD, HDFC Bank— PTI

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