Speeches & Media Interactions

Deputy Governor Swaminathan J, distinguished delegates from International Association of Deposit Insurers (IADI) and global deposit insurers, board members and officers of Deposit Insurance and Credit Guarantee Corporation (DICGC), officers of RBI, ladies and gentlemen, good afternoon to all of you. At the outset, I would like to thank IADI and DICGC for inviting me for delivering the valedictory address at the IADI Asia-Pacific Regional Committee International Conference being held in the beautiful city of Jaipur.

Good afternoon ladies and gentlemen, At the outset, let me thank the organisers for inviting me to deliver this address and convey my thoughts at this prestigious event. We, as central bankers, interact with various stakeholders on different occasions and diverse gatherings like this provide us an opportunity to reflect on issues which straddle not just the world of finance but also impinges on wider scheme of things. The idea is to flag issues which have wider ramifications beyond the conventional financial risks. Therefore, while I would dwell upon the Indian financial outlook, I would like to avail of this opportunity also to discuss on the issue of climate change and the role of financial entities in the transition process towards a more sustainable growth.

Ladies and gentlemen, a very good morning, I am happy to be here this morning and engage with you at this forum. Keeping in view the theme of the event, I thought it would be appropriate to discuss a few issues around the risk, compliance and internal audit, collectively known as assurance functions, as they help identify and manage risks for sustainable growth of financial entities. From a regulatory and supervisory perspective too, Reserve Bank attaches utmost important to the assurance function and therefore, to ensure that there is alignment between our perspectives and to communicate our expectations, we feel a continuing dialogue on this issue is extremely important.

I am delighted to be here today to convey my thoughts on the issue of statutory audit of commercial banks and AIFIs. In many ways, we, as Regulators/ Supervisors and you as Auditors, share a common goal. Auditors play a very crucial role in ensuring the health of the financial system as they assist in maintainance of regulatory oversight by ensuring that the financial statements present a true and fair picture of the affairs of the regulated entity. The statutory auditors play a significant role in maintaining stakeholder confidence in audited financial statements and this is particularly important in the case of banking industry where the entire edifice is built on ‘trust’ and the biggest external stakeholders, i.e., depositors are fragmented and unorganised. Therefore, the Reserve Bank has a strong interest in promoting sound and high quality accounting and disclosure standards for the banking and financial industry as well as in having transparent and comparable financial statements that strengthen market discipline

Deputy Governor Shri Swaminathan, Executive Directors, Chairmen of the Board and ACB of ARCs, MDs & CEOs of ARCs, my colleagues from RBI, ladies and gentlemen,

I am happy to be amidst you today to talk about the crucial topic of governance in ARCs. But before I address the issue of governance, let me briefly discuss the importance of credit risk management and the critical role envisaged for ARCs – both in terms of legislative intent and regulatory expectations, in India’s financial landscape.

Role of ARCs in the Stressed Asset Management

We all know that books of our financial institutions are largely susceptible to credit risk as loans and advances constitute a large proportion of the asset portfolio. The credit risk weighted assets (credit RWAs), in fact, constitute around 80 per cent of total RWAs of the banking system. Therefore, any prudential regulation to safeguard the stability of financial system must remain alive to the credit risk in the books of financial entities, banks and non-banks alike.

Good Evening,

It is indeed a pleasure to be here amidst this distinguished gathering. The theme of the summit, ‘Rise of the Indian Spring’, is both contextual and inspiring, reflecting not just the rising trajectory and profile of the Indian economy, but also the sentiments prevailing within the country and across the world.

Dr. P.G. Sankaran, Vice Chancellor, CUSAT; Dr. Jagathy Raj, Director, School of Management Studies; faculty members, students, ladies, and gentlemen, At the outset, let me thank Dr. Jagathy Raj for inviting to deliver this memorial lecture in the memory of Dr. M.V. Pylee. I cherish this gesture from my alma mater to deliver this talk and it is indeed an honour and privilege to do so. Padma Bhushan Dr. M. V. Pylee was a distinguished figure in the field of management and administration who enriched the field of management education in not only Kerala but across the country with his scholarly work. He made significant contributions to the society through his thought leadership and academic endeavour and with his enduring legacy. Dr. Pylee's leadership as a Management Guru and as the Director of the School of Management Studies, CUSAT, contributed significantly to the development of management education in Kerala. His vision and guidance helped establish several institutions as centers of excellence in management studies. Unfortunately, I did not have an opportunity to directly interact with Dr. Pylee as he demitted office of Director before I joined SMS, but I have benefitted from his ideals and vision, having completed my MBA from SMS in the year 1982.

Ladies and Gentlemen! It’s a pleasure to be here at CII NBFC Summit 2024. At the outset, let me thank Mr. Abhimanyu Munjal, Chairman, CII National Committee on Non-Banking Finance Companies (NBFCs) for extending the invitation to me for delivering this inaugural talk at the 6th edition of the NBFC summit organised by CII. I recall that it was at this forum, in earlier speech2 at CII NBFC Summit held in October 2021, I had dwelt upon the introduction of Scale Based Regulatory (SBR) approach in the NBFC Sector. Much water has flown under the bridge since then. SBR framework has since been rolled out for the NBFC sector and NBFCs have seamlessly transitioned to the revised regulations. While I had previously discussed the detailed contours of the SBR framework, today I propose to discuss the broad regulatory approaches behind NBFC regulations, including SBR framework and then focus on few specific issues pertaining to NBFC sector.

(Remarks delivered virtually by Shri M. Rajeshwar Rao, Deputy Governor, Reserve Bank of India – December 22, 2023 - at the 106th Annual Conference of Indian Economic Association in Delhi)