Banking sector needs to address governance gaps to meet upcoming challenges: RBI Deputy Governor

India’s banking sector needs to address gaps in the governance frameworks and assurance functions in a bid to gear up to meet the future challenges as the country strives to become a developed nation by 2047, RBI Deputy Governor M Rajeshwar Rao said.

India's banking sector needs to address gaps in the governance frameworks and assurance functions in a bid to gear up to meet the future challenges as the country strives to become a developed nation by 2047, Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao said.

Addressing a conference of directors of banks organised by the RBI recently, he emphasised that financial institutions will need extraordinary amounts of financial resources to support growth to realise the visions for a brighter tomorrow.

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"Raising these resources would not be a constraint for financial intermediaries with robust governance frameworks as they can command a governance premium. It is important in this context to gain and retain the trust of other stakeholders such as depositors and various providers of financial resources," he said.

“This is best ensured by strong governance, control, and assurance functions in financial institutions,” he added.

Also, he said, "While we collectively aspire for an efficient financial intermediation with positive spillover to the real sectors, these aspirations are set in an increasingly competitive, diverse, and interconnected world. As the saying goes, he said, the time to fix the roof is while the Sun is shining.

"The banking sector in India at this juncture is sound, resilient, and financially healthy. So, the time is perhaps right to improve the plumbing by addressing the gaps in governance frameworks, assurance functions and strategise for better times ahead," he said.