Banking sector all set to support growth of Indian economy: RBI deputy governor
The Reserve Bank of India (RBI) deputy governor Swaminathan J has said that the banking sector, which is at a decadal high in terms of financial parameters, is all set to support the growth of the Indian economy. He also said the RBI has undertaken several initiatives to enhance the effectiveness of the auditing process. These include structured meeting mechanisms between supervisory teams and auditors, introducing exception reporting, streamlining processes for the appointment of auditors, and other measures designed to safeguard the independence of auditors.
RBI deputy governor stated that auditors must apply due rigour in their audit processes to mitigate any potential for divergence, under-provisioning, or non-compliance with statutory and regulatory requirements. Further, he said a critical aspect of the auditor's role is the careful evaluation of internal financial controls over financial reporting. By maintaining meticulous standards and adherence to regulatory guidelines as well as auditing standards, auditors can minimise the need for supervisors to intervene. He also emphasised the need to uphold the highest standards of transparency, diligence, and professionalism to foster trust among stakeholders and ensure the continued resilience of the banking system.
According to the RBI's latest Financial Stability Report, the bad assets or gross non-performing assets (NPAs) of commercial banks fell to a 12-year low of 2.8 per cent in March 2024 and may go down further to 2.5 per cent by the end of the current fiscal. Scheduled Commercial Banks' (SCBs) gross non-performing assets (GNPA) ratio fell to 2.8 per cent, and the net non-performing assets (NNPA) ratio to 0.6 per cent at the end of March 2024.
