RBI's main focus to ensure strong balance sheets

New Delhi: The Reserve Bank of India (RBI) released its annual report on banking on Wednesday. The report indicates the main focus of RBI will be to ensure strong bank balance sheets.

The RBI has urged banks to have proper mechanism for assessment of risks to maintain strong balance sheets.

The banks will also have to have more transparency as far as disclosure and corporate governance is concerned.

The RBI highlights the need to maintain non performing assets or NPA from growing as less as possible for banks.

Banks need to have mechanism for proper assessment of risks, need to improve transparency, disclosure and corp governance, critical to keep NPA accretion minimum for banks.

MORE HIGHLIGHTS

• Complex securitisation to be guided by risk management capabilities
• BASEL II implementation to remain major challenge for banks, RBI
• RBI to respond swiftly, preemptively to adverse external developments
• Banks must use commercial judgment for withdrawals of sanctioned limits
• Banks must review lending rates on change in inflation outlook
• Banks must review lending rates on domestic liquidity, cost of funds
• BPLR exhibits upward flexibility during monetary tightening
• BPLR exhibits downward rigidity during monetary easing
• BPLR downward rigidity impedes monetary transmission mechanism
• BPLR rigidities don't allow easy liquidity to be passed to borrowers
• RBI supervisory policy to focus on evaluation of risk management
• RBI supervisory policy to focus on enhancing firm-wide oversight
• Banks exposure to specific sectors may become part of supervision