Business Economy 27 Aug 2020 Extreme risk aversio ...

Extreme risk aversion can be self-defeating: RBI Governor warns banks

PTI
Published Aug 27, 2020, 12:14 pm IST
Updated Aug 27, 2020, 12:22 pm IST
Rather than becoming averse to lending, banks have to improve their risk management and governance frameworks, Das said
 RBI Governor Shaktikanta Das on Thursday warned banks that being overly risk averse will be self-defeating. (PTI Photo)
  RBI Governor Shaktikanta Das on Thursday warned banks that being overly risk averse will be self-defeating. (PTI Photo)

Mumbai: RBI Governor Shaktikanta Das on Thursday warned banks that being overly risk averse will be "self-defeating" and that lenders will not be able to “win their bread” if they do not carry out their basic task.

Speaking at a webinar organised by financial daily Business Standard, Das said, rather than becoming averse to lending, banks have to improve their risk management and governance frameworks, and also build sufficient resilience.

 

“Extreme risk aversion can be self-defeating, banks will not be able to win their bread,” Das said, amid reports of a slowdown in credit growth in the system, which is essential to push up the economy.

Bankers point out to past experiences and feel that containing loans from getting sour is an important objective.

Das said there is a scope for banks to improve their ability to avert frauds from happening and added that their risk frameworks should be able to “smell vulnerabilities”.

The Governor said, overall, the banking system continues to be sound and stable and the lenders will have to evolve a new model of growth in the times to come.

 

He said the RBI will withdraw its COVID-19 pandemic-related dispensations in a calibrated manner, but will not do so very soon.

Appreciating the work done by the government in response to the crisis, Das termed it as fiscally responsible, prudent and well calibrated.

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