Reserve Bank of India Governor Shaktikanta Das on Tuesday said the RBI was taking a closer look at the business models of some banks.
He was a speaking at an event hosted by the State Bank of India. Das said some banks have adopted a high risk-high returns strategy, and while the RBI did not intend to give commercial advice to banks, it was important to red flag some of these issues.
He said banks should ensure that business models and strategies were conscious choices instead of follow-the-market approach.
Das said that given capital adequacy constraints, banks should look at using capital efficiently and taking prudent decisions.
He said that some banks were doing more for shareholders than for their depositors, and that banks responsibility towards depositors should be weighed against responsibility towards shareholders of banks.
Das also said that it was not RBI’s intention to create divergence between the boards and managements of banks, but there were instances were instances of some instance of management and boards of banks were getting “too cosy”.
“(Some) managements and boards have become too cosy, which is not a good situation,” Das said.