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Informist, Tuesday, Nov. 19, 2024

 

--RBI Swaminathan: Will not hesitate to take action if bks breach KYC norms 

--RBI Swaminathan:Customer centricity to see supervisory focus in coming yrs 

--RBI Swaminathan: Timely data an essential part of keeping banks resilient 

--RBI Swaminathan: Essential bks keep an eye on potential concentration risk 

--CONTEXT: RBI Deputy Governor Swaminathan in address to pvt bks' directors 

--RBI Swaminathan: Attrition rate in pvt bks improved; still long way to go 

 

NEW DELHI – Customer centricity will attract substantial supervisory focus in the coming months and years, Reserve Bank of India Deputy Governor Swaminathan J. said on Tuesday, while urging boards of banks to focus on the aspect of customer service. 

 

"Boards must ensure that the banks' service delivery embodies empathy and fairness, particularly toward vulnerable groups like senior citizens who often encounter hurdles in accessing banking services," Swaminathan said at a conference of directors of private sector banks in Mumbai. 

 

The deputy governor also flagged concerns around customer grievance mechanisms, saying the Internal Ombudsman structure was treated more as a formality than as a robust, effective resource by banks. He urged boards of banks to work towards adopting customer-centric governance, adding that when it comes to this, the RBI "will not hesitate to act in case a supervisory intervention is considered necessary". 

 

At the same event, RBI Governor Shaktikanta Das had spoken at length about the need for banks to keep customers' needs at the forefront. Das had also flagged instances of complaints being misclassified as customer queries, and rejected grievances not being escalated to the internal ombudsman of banks. 

 

Further, Swaminathan urged banks' board members, particularly the chair of the customer service committee, to ensure that know-your-customer or KYC guidelines are followed with both precision and empathy, while flagging instances of complaints regarding the same. He added that the central bank would not hesitate to take regulatory or supervisory action against entities that fail to address KYC related concerns in a timely and considerate manner.

 

Echoing the RBI governor's views at the same event, Swaminathan asked banks to keep an eye on potential concentration risks while assessing the business model. "Banks often gravitate toward particular sectors, segments, or products that appear profitable or "safe" in the short term. However, over-reliance on any one area can lead to imbalanced exposures, making the bank vulnerable if conditions within that sector or product category suddenly change," he said.

 

In November last year, the RBI had acted to clamp down on the rapid growth seen in some segments of personal loans. The measures included an increase in risk weights on banks' personal and credit card loans and a double-whammy for non-banking financial companies in the form of an increase in the risk weights on banks' exposures to them as well as risk weights for NBFCs' own unsecured loans.

 

Swaminathan also marked out concerns posed by cyber risks to banks' resilience, asking lenders to have a robust information technology and cybersecurity infrastructure in place. The deputy governor also stressed the need for banks to have accurate, timely, and comprehensive data, urging them to champion data integrity initiatives and ensuring robust data systems. "Real-time data can allow you to detect potential issues early, track trends in non-performing assets, or identify early warning signs in market or liquidity conditions. When it comes to risk, timely data isn’t just a nice-to-have—it’s an essential part of keeping your bank resilient," he said. 

 

Swaminathan acknowledged that while attrition in the private sector banking industry has seen improvement, there is still a long way to go. In order to support the same, he urged boards of banks to explore and support initiatives that emphasise career development, mentorship programs, competitive benefits, and a supportive workplace culture that makes employees feel valued.  End 

 

Reported by Pratiksha

Edited by Avishek Dutta

 

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