Mumbai, Nov 19: Union Finance Minister Nirmala Sitharaman on Monday said bank interest rates are very stressful for some people, and steps are needed to make them affordable.Amid widespread concerns about a possible slowdown in economic growth, the finance minister assured that the government is fully aware of the domestic and global challenges, and added that there is no need to have “undue concerns”.
“What is important is when you look at India’s growth requirements, and you can have so many different voices coming out and saying the cost of borrowing is really very stressful, and a time when we want industries to ramp up and move (to) building capacities, bank interest rates will have to be far more affordable,” Sitharaman said.
Speaking at the annual business and economic conclave organised by SBI, the minister also asked banks to concentrate on their core function of giving loans and added that the “misselling” of insurance products also indirectly adds to the cost of borrowing for an entity.
Meanwhile, RBI Governor Shaktikanta Das on Monday asked banks to proactively monitor their portfolios, identify areas of over-concentration, and take preemptive measures to address potential risks and challenges.
The Governor also asked bank boards to strengthen the internal governance framework to curb unethical practices, such as mis-selling of products or opening of accounts without proper KYC verification.
In a keynote address at the Conference of Directors of Private Sector Banks, Das said bank boards need to continuously assess external factors like regulatory changes, shifting market winds, overall macroeconomic changes and advances in technology.
“Boards should also be fully cognisant of the organisationās internal strengths, vulnerabilities, and operational conditions so that they have a clear situational awareness,’ he said.
The Governor stressed that boards must be cognizant of build-up of concentrations in their business model.
Excessive reliance on specific sectors, markets, or customer segments can expose the bank to amplified risks, particularly in times of economic stress or industry shifts, he said.
“Boards can play a proactive role by regularly monitoring the bankās portfolios, identifying potential areas of over-concentration, and taking pre-emptive steps to maintain a balanced approach,” Das added.
The boards, he said must also remain vigilant to operational risks, particularly those arising from IT outsourcing and reliance on third-party vendors.