RBI Asks Small Finance Banks To Strengthen Risk Governance

The Reserve Bank of India (RBI) has advised small financing banks to improve governance and identify risks, with important areas of caution to ensure long-term success.

RBI Deputy Governor J. Swaminathan has advocated for better governance in small financing banks, emphasising the significance of identifying possible hazards. In his speech, he challenged bank boards to consider their reliance on high-cost term deposits and bulk deposits from limited sources. He also advocated analysing asset exposures that could have an impact on banks if they became problematic. Swaminathan’s views highlight the importance of excellent risk management in ensuring the long-term viability of these institutions.