The RBI Governor said the banking system continues to remain stable despite global headwinds, adding that there are no systemic risks to banks’ profitability or health, even as uncertainty persists due to the West Asia conflict.
Reserve Bank of India Governor Sanjay Malhotra on Wednesday said the country’s banking system remains strong and secure, despite recent concerns arising from developments in some private sector banks.
Speaking at the post-monetary policy press conference, he clarified that such incidents are isolated and do not indicate any broader issue within the banking system.
“I want to assure everyone that the banking system is very resilient, very safe and strong,” he said.
He further added that strict regulations and continuous monitoring by the RBI play a key role in maintaining stability.
“Comprehensive regulations covering conduct, governance, prudence and liquidity, along with our supervisory framework, ensure that the banking system remains healthy and robust,” he said.
He described these incidents as isolated in nature, characterising them as criminal acts.
No issues detected in HDFC Bank
Sanjay Malhotra also addressed concerns surrounding HDFC Bank after the sudden resignation of its Chairman Atanu Chakraborty on March 18 and the subsequent decline in its share price.
He said the Reserve Bank of India had closely reviewed the matter and found no governance or conduct-related issues during its supervisory inspection.
Malhotra added that the RBI had also examined the minutes of the bank’s meetings and did not identify any areas of concern, stating that nothing of material significance was found.
The central bank had earlier reiterated in its March 19 statement that there were no concerns regarding the bank’s functioning.
The Reserve Bank of India had stated that HDFC Bank, classified as a Domestic Systemically Important Bank (D-SIB), remains financially strong with a professionally managed board and a capable leadership team.
It added that, based on its regular assessments, there are no material concerns regarding the bank’s conduct or governance.
Banking System stays stable
Sanjay Malhotra stated that the broader banking system remains stable despite global challenges. He added that there are no systemic risks to the profitability or overall health of banks, even as uncertainty persists due to the West Asia conflict.
He reiterated that India’s banks are well-regulated and closely supervised, which helps maintain stability during periods of uncertainty.
On interest rates, he indicated that the current low-rate environment may continue for some time. He also noted that the RBI’s recent measures to manage volatility in the rupee are temporary and not intended to remain in place indefinitely.
The Reserve Bank of India’s remarks are intended to reassure investors and depositors about the safety and stability of the banking system.
While developments in individual banks may trigger short-term concerns, the central bank emphasised that these are isolated incidents and do not indicate any broader systemic risk.