Focus on sustainable business model, governance: RBI tells SFBs in meeting

The Reserve Bank of India (RBI) on Friday asked small finance banks (SFBs) to focus on sustainable growth and accord importance to business model and governance.

RBI Deputy Governors M. K. Jain and M. Rajeshwar Rao held discussions with managing directors (MDs) and chief executive officers (CEOs) of SFBs. Executive directors of supervision and regulation and other senior officials of the RBI also attended the meeting, the central bank said in a statement.

“In the meeting, the emphasis on according due importance to these themes for sustainable growth of SFBs, particularly their business model and governance, was reiterated after taking stock of the developments in the sector,” the statement said.

SFBs were advised to continue to evolve in tune with the differentiated banking licence given to them with proportionate growth in their capital base.

“Among other matters, asset quality concerns, including viable portfolio mix and further strengthening of customer service and grievance redressal framework with commensurate IT resilience, were also discussed,” it said.

Earlier in the meeting with heads of SFBs held in August 2021, evolution of their business model and the need for enhancing board oversight and professionalism, improving assurance functions and augmenting IT infrastructure, taking into account the stress build-up due to Covid-19 along with requisite mitigation measures, were discussed.