RBI orders banks to take proactive measures to maintain business continuity

The RBI Governor Shaktikanta Das, in a meeting on Monday, asked bank CEOs to take proactive measures to maintain business continuity, sharpen strategies and raise adequate capital – in a bid to strengthen their balance sheets.

This directive, as per ToI, comes at a time when the country is battling the second wave of COVID-19 pandemic, with fears of additional restrictions on movements and lockdowns to stem the spread.

The meeting, held through video conference, was attended by all public sector banks and select private sector banks as well as the central bank’s deputy governors and a few senior officials.

Das emphasized the need for banks to maintain a close watch on payments and other IT systems operated by them and fortifying them for enhanced efficiency and resilience to offer seamless and uninterrupted customer service. Bankers said that the central bank was concerned about the digital channels as these have emerged as the primary route for conducting bank transactions for most customers.

The governor highlighted the recent policy measures taken by the RBI to further support the ongoing recovery, while preserving financial stability. He discussed the importance of credit flows in sustaining the nascent economic recovery and advised the banks to remain watchful of the evolving situation. Reports say that Das also asked the banks on the prospect for stressed assets during the current fiscal. Bankers said that while they did expect the economic revival to continue, the recovery was likely to be “K” shaped in the first quarter.

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Some sectors of the economy were expected to look up but businesses that were hit hard by the lockdown in 2020 continued to face dim prospects because of the second wave of infections. As such, Das also asked banks about the progress they had achieved in implementing the COVID resolution framework, which was introduced by the RBI in the previous fiscal.