Shaktikanta Das says that incentives for bank staff should be carefully designed so that they are not encouraged to engage in unethical practices. (File Photo)
RBI Governor Shaktikanta Das on Monday asked bank boards to strengthen the internal governance framework to prevent unethical practices, such as mis-selling of products or opening accounts without proper KYC verification.
Das also said that incentives for bank staff should be carefully designed so that they are not encouraged to engage in unethical practices.
“While such practices may offer short-term benefits, they ultimately expose the bank to significant long-term risks, including reputational damage, supervisory scrutiny and financial penalties,” he said in a keynote address at a conference of directors of private sector banks. here
Das further said that the Indian banking sector is passing through a time that is full of opportunities as well as threats and challenges.
“The banking sector is strong and stable. All the financial indicators have improved since we met in May last year, reflecting the efforts of various participants in the banking sector, including their management and boards,” he said.
In order to keep the resilience of the banking system intact, the governor emphasized that strong fundamentals should be leveraged to strengthen and strengthen defenses.
“Good times are, after all, the best times to strengthen resilience and develop sustainably,” he added.
Das also said that organizations face significant challenges and risks in a rapidly evolving and technology-driven environment.
Factors such as technological advancement, rise of new-age fintech entities, third-party dependency and climate change are reshaping the economic landscape, he added.
Amid these changing tides, bank boards should serve as a beacon for lenders and provide constant guidance in navigating these challenges and moving towards safe and prosperous shores, he said.