Mumbai, Sanjay Malhotra on Wednesday said that the Reserve Bank of India has not found any major governance issues in HDFC Bank, even after the bank’s chairman stepped down citing ethical disagreements.
Speaking after the monetary policy announcement, the RBI governor said that based on regular supervision, there are no material concerns about the bank’s governance.
“Existing banking laws are clear and effective, and there is currently no need for any changes,” he said.
“However, the central bank would review the situation if required,” Malhotra stated.
Malhotra also reassured that there are no broader concerns in the banking sector. “The system remains safe and stable, and such individual incidents do not affect the overall health of banks,” he explained.
“There are no systemic issues related to profitability or financial strength in HDFC Bank,” Malhotra mentioned.
His comments come after recent developments at HDFC Bank, where the chairman resigned suddenly, pointing to differences over values and ethics.
The development had raised questions about governance at the country’s largest private lender.
The RBI governor also said that the central bank is planning to update guidelines for bank boards.
The aim is to help boards focus more on key policy decisions rather than getting involved in daily operations.
He explained that the review of these rules was started after requests from banks.
The proposed changes are intended to make better use of board members’ time by allowing management to handle routine operational matters, while boards concentrate on bigger strategic issues.
Meanwhile, the central bank proposed to give banks greater flexibility to include quarterly profits in capital-to-risk weighted assets ratio (CRAR) calculations irrespective of fluctuations in provisioning levels.
“It is proposed to remove the condition regarding NPA provisioning for inclusion of quarterly profits in CRAR computation,” Malhotra said during RBI MPC decision announcement.
