India central bank pushes for stronger governance at banks

FILE PHOTO: A police officer walks past the Reserve Bank of India (RBI) logo inside its headquarters in Mumbai

By Siddhi Nayak and Nikunj Ohri

MUMBAI (Reuters) - India's central bank on Monday pushed the country's lenders to strengthen their boards and increase focus on managing risk.

At a meeting with senior management of government-owned banks on Monday, Reserve Bank of India Governor Shaktikanta Das asked lenders to strengthen governance so that they are able to identify risks early.

"The Governor also emphasized the need for banks to ensure continued financial and operational resilience," according to a statement from the RBI.

Reuters had earlier reported, citing sources, that bank executives at the meeting were urged to focus on keeping risk in check amid a high growth in credit.

The meeting with banks comes against the backdrop of a strong credit market, with loan demand running more than 15% higher than a year ago. Deposit growth, however, has been weak.

The RBI cautioned that high growth comes with the risk of bad loans, said a banker who attended the meeting.

Other issues covered in detail were IT and cyber security risks, another banker said.

Both bankers declined to be identified as they are not allowed to speak to media.

"The emphasis of the RBI's meeting with banks was to further strengthen the banking system of India," said Charan Singh, chairman of Punjab and Sind Bank.

(Reporting by Siddhi Nayak in Mumbai and Nikunj Ohri in New Delhi; Editing by Saumyadeb Chakrabarty)