Loading...

Top
Help
×

By creating an account you can:

Logo TaxTMI
Call Us / Help / Feedback

Contact Us At :

E-mail: [email protected]

Call / WhatsApp at: +91 99117 96707

For more information, Check Contact Us

FAQs :

To know Frequently Asked Questions, Check FAQs

Most Asked Video Tutorials :

For more tutorials, Check Video Tutorials

Submit Feedback/Suggestion :

Email :
Please provide your email address so we can follow up on your feedback.
Category :
Description :
Min 15 characters 0/2000
Make Most of Text Search
  1. Checkout this video tutorial: How to search effectively on TaxTMI.
  2. Put words in double quotes for exact word search, eg: "income tax"
  3. Avoid noise words such as : 'and, of, the, a'
  4. Sort by Relevance to get the most relevant document.
  5. Press Enter to add multiple terms/multiple phrases, and then click on Search to Search.
  6. Text Search
  7. The system will try to fetch results that contains ALL your words.
  8. Once you add keywords, you'll see a new 'Search In' filter that makes your results even more precise.
  9. Text Search
Add to...
You have not created any category. Kindly create one to bookmark this item!
Create New Category
Hide
Title :
Description :
❮❮ Hide
Default View
Expand ❯❯
Close ✕
🔎 News - Adv. Search
TEXT SEARCH:

Press 'Enter' to add multiple search terms. Rules for Better Search

Search In:
Main Text + AI Text
  • Main Text
  • Main Text + AI Text
  • AI Text
Category: ?
Categorized by AI
---- All Categories ----
  • ---- All Categories ----
  • Income Tax
  • GST
  • Customs, DGFT & SEZ
  • FEMA & RBI
  • Corp. Laws, SEBI & IBC
  • PMLA, Black Money & ED
  • Budget
  • News and Press Release
  • PTI News
Month:
---- All Months ----
  • ---- All Months ----
  • January
  • February
  • March
  • April
  • May
  • June
  • July
  • August
  • September
  • October
  • November
  • December
Year:
---- All Years ----
  • ---- All Years ----
  • 2026
  • 2025
  • 2024
  • 2023
  • 2022
  • 2021
  • 2020
  • 2019
  • 2018
  • 2017
  • 2016
  • 2015
  • 2014
  • 2013
  • 2012
  • 2011
Sort By: ?
In Sort By 'Default', exact matches for text search are shown at the top, followed by the remaining results in their regular order.
Relevance Default Date
    Latur CA booked for issuing certificates to facilitate remittance of hundreds of crores abroad
    Stock Market for Beginners: How to Start Investing Without Feeling Overwhelmed
    CGST Zone detects clandestine pan masala, tobacco unit, detects tax evasion of Rs 160 cr
    Korea Industry Expo (KoINDEX) 2026 Opens at Yashobhoomi on 27 August
    Protection in predicate offence doesn't automatically extend to PMLA case: Delhi HC
    DFS Concludes Two-Day Workshop on Enhancing Accessibility of Financial Services for Divyangjans
    National Financial Reporting Authority (NFRA) conducts sixth outreach programmes with focus on small and medium auditors under the theme “Creating a...
    CCI imposes monetary and non-monetary sanctions on Agro Input Dealers Association, Agro Input Welfare Association for indulging in anti-competitive co...
    India-Finland cooperation takes centre stage at circular economy forum
    CCI imposes penalty on Rekha Agencies and SS Marketing for indulging in anti-competitive conduct in respect of Himachal Pradesh Tender 2013 for the pr...
    US is set to impose 50% tariffs on $20 billion worth of Canadian products
    Rupee settles 3 paise higher at 95.71 against US dollar
    29 FDI Investments Worth ₹4,895.65 Crore Reported Under Revised Framework
    India and ADB sign $230 million loan to modernise water supply and sanitation in Chennai
    DGGI unearths clandestine pan masala and tobacco manufacturing network in Uttar Pradesh; 27 undeclared pouch-packing machines seized, evasion of about...
    Mission SAKSHAM: Scaling Capability through Co-operation - Keynote Address by Shri Swaminathan J, Deputy Governor at Mission SAKSHAM Programme for Dir...
    India’s Foreign Exchange Markets: Getting ready for the next Decade [Keynote Address delivered by Deputy Governor Shri Rohit Jain on the Annual Day ...
    Govt rejects ethanol link to sugar price surge, says duty free imports allowed to curb prices
    China moves to wrap up saga of troubled property giant Evergrande after founder gets life sentence
    India's forex kitty swells USD 9.9 bn to USD 716.9 bn
❯❯
Maximize Maximize Maximize
0 / 200
Expand Note
Add to Folder

No Folders have been created

+

Are you sure you want to delete "My most important" ?

NOTE:

News
Showing Results for :
Reset Filters
Results Found:
Show All Summaries Hide All Summaries
August 22, 2026
Show AI Summary
Form 15CB certification faces scrutiny where inadequate verification allegedly enables foreign remittances through shell companies and false certificates.
Alleged misuse of Form 15CB certification has resulted in criminal proceedings concerning certificates issued for foreign remittances without verification of underlying documents. Form 15CB requires certification of applicable taxability and tax-deduction particulars for specified remittances to non-residents before processing by an authorised dealer. The allegations concern certificates that potentially enabled cross-border transfers through shell or non-existent companies, involving cheating, false certification, false evidence and common intention.
August 22, 2026
Show AI Summary
Beginner stock market investing requires regulated accounts, risk-aware financial planning, diversification and informed company assessment before purchasing securities.
Beginner stock market investing requires a bank account, a trading or broking account with a SEBI-registered broker, and a Demat account for electronic holding of securities. Investments involve risk of loss and should align with financial goals, time horizon and loss-bearing capacity. Investors should understand primary and secondary markets, distinguish long-term investing from short-term trading, assess companies before purchase, diversify holdings, consider charges, maintain records and avoid borrowed-money investing, rumours and momentum-driven decisions.
August 22, 2026
Show AI Summary
Capacity-based tobacco taxation targets undeclared packing machinery used for clandestine production and clearance without indirect tax payment.
Clandestine manufacture and clearance of pan masala, scented jarda and tobacco products without registration or payment of GST, HSNS Cess and central excise duty was detected through an intelligence-led search. Undeclared Form-Fill-Seal packing machines, workers, finished goods, raw materials, transport vehicles, packing materials and records indicated unaccounted production and clearance. Capacity-based monthly HSNS Cess for pan masala is computed according to the number, type and capacity of installed packing machines, while a corresponding capacity-based central excise levy applies to chewing tobacco, jarda and gutkha.
August 22, 2026
Show AI Summary
Trade exhibition connects Korean exporters with Indian buyers through sector-specific consultations and certification guidance for market entry.
KoINDEX 2026 is a business-to-business trade exhibition bringing Korean manufacturers and exporters together with buyers in India and South Asia. It focuses on beauty and personal-care products, processed and functional foods, and construction, building and safety products. Commercial engagement includes pre-matched export consultations with project owners, contractors, distributors, wholesalers, e-commerce platforms and food distribution businesses. A seminar addresses Bureau of Indian Standards certification and market-entry requirements for Korean products entering the Indian market.
August 22, 2026
Show AI Summary
Independent PMLA proceedings require separate anticipatory bail assessment; predicate-offence protection alone cannot establish pre-arrest protection.
Protection in a predicate-offence FIR does not automatically extend to independent PMLA proceedings. Anticipatory bail in a money-laundering investigation must be assessed under the applicable PMLA condition and on the material connecting the applicant to alleged proceeds of crime. Relevant considerations include the financial trail, recorded statements, bank-account analysis, compliance with summonses, cooperation with inquiry, and the need for personal participation in evidence collection and confrontation with documentary and digital material.
August 22, 2026
Show AI Summary
Financial accessibility for Divyangjans requires compliance standards, practical implementation measures and stronger institutional capacity across financial services.
Accessibility of financial services for Divyangjans was examined through a workshop focused on public sector banks, insurance companies, regulators and public financial institutions. Discussions covered accessibility standards, compliance requirements, legal provisions, practical implementation challenges and institutional best practices under the Sugamya Bharat initiative. Participants considered operational measures to strengthen institutional capacity, inclusivity and equitable access to financial services.
August 22, 2026
Show AI Summary
Audit quality enhancement for small and medium auditors emphasises technology, global standards, inspection insights and stronger financial reporting.
Audit quality and financial reporting reliability were the focus of NFRA's outreach programme for small and medium audit firms. The programme promoted professional capacity-building, alignment with contemporary global standards, adoption of appropriate audit technology, and the public-interest role of the accountancy profession. Technical sessions covered audit strategy documentation, risks of material misstatement, and practical lessons from audit-firm oversight to support improved day-to-day audit practice and high-quality financial reporting.
August 22, 2026
Show AI Summary
Cartelisation by agro-input dealer associations attracted monetary sanctions, cease-and-desist directions, and mandatory competition-compliance training for responsible officials.
Cartelisation by the two agro-input dealer associations and named individuals contravened Section 3(3)(b) read with Section 3(1) of the Competition Act, 2002. Monetary sanctions were imposed, and association office-bearers were held liable under Section 48. The parties and liable officials were directed to cease and desist from future anti-competitive conduct and to organise competition-compliance training to promote awareness and compliance within the associations.
August 22, 2026
Show AI Summary
Circular economy partnerships promote resilient value chains, resource efficiency and sustainable growth alongside evolving India-EU trade integration.
India-Finland circular economy cooperation is being developed through business, technology, investment and commercial partnerships supporting resource-efficient and sustainable growth. Discussions focused on competitive and resilient value chains based on circularity, traceability, resource efficiency and sustainable business practices. Circular economy principles extend beyond waste management into product design, value chains, resource use, skills development and new business models. The India-EU free trade agreement remains subject to legal review and formal ratification and is not yet in force.
August 22, 2026
Show AI Summary
Bid rigging through pre-bid exchange of sensitive price information attracted penalties and cease-and-desist directions in tyre procurement.
Bid rigging in tyre procurement was established where Rekha Agencies and SS Marketing exchanged commercially sensitive price-bid information before submitting bids for the Himachal Pradesh Tender 2013. The concerted conduct contravened the prohibition on anti-competitive agreements and bid rigging. Monetary penalties and cease-and-desist directions were imposed on both enterprises. An official of Rekha Agencies was also penalised for liability arising from the contravention, while proceedings against the official of SS Marketing stood abated following his death.
August 22, 2026
Show AI Summary
Import tariffs on Canadian products trigger potential retaliatory levies after bilateral negotiations fail to reach agreement.
Import tariffs on Canadian products are set to be imposed by the United States at a 50% rate after bilateral negotiations did not produce an agreement. The measures cover products including hockey sticks and tongue depressors and affect a limited share of Canada's annual exports to the United States. Canada has indicated possible retaliatory levies, intensifying the bilateral trade dispute.
August 21, 2026
Show AI Summary
Rupee exchange-rate movement reflected geopolitical tensions, crude oil conditions and market intervention, while export payment rules expanded rupee invoicing.
Foreign Trade Policy amendments facilitate export invoicing and receipt of payments in Indian rupees. For exports to countries outside the Asian Clearing Union, export contracts and invoices may be denominated in Indian rupees or any foreign currency. The earlier general requirement that export earnings be received in a freely convertible currency is thereby eased, while applicable rules continue to vary according to destination.
August 21, 2026
Show AI Summary
Non-controlling land-bordering country ownership permits eligible foreign investment through the automatic route, subject to sectoral conditions and reporting.
Foreign direct investment may use the automatic route where non-controlling beneficial ownership from a land-bordering country in the investor entity does not exceed 10%, subject to sectoral caps, entry routes and other applicable conditions. The beneficial ownership test applies at the investor-entity level. Eligible investors need not obtain separate prior Government approval after reporting relevant information to the Government. The framework replaces the earlier approval requirement applicable even to minimal beneficial ownership from land-bordering countries.
August 21, 2026
Show AI Summary
Climate-resilient urban water security modernises Chennai's supply and sanitation systems through ring-main infrastructure, digital monitoring, and safer sewer operations.
Chennai Climate-Resilient Water Security and Sewerage Project modernises and expands water supply and sanitation infrastructure through a loan arrangement between the Government of India and the Asian Development Bank. Measures include new pipelines, upgraded pumping stations, performance-based utility operations, and a comprehensive ring-main system to improve water-pressure balance, distribution efficiency, reliability and climate resilience. Digital monitoring and advanced blockage-detection technology are intended to improve operational decisions, customer responsiveness and worker safety while eliminating hazardous manual sewer inspections.
August 21, 2026
Show AI Summary
Capacity-based taxation targets undeclared pouch-packing machinery used for clandestine pan masala and tobacco production and untaxed clearances.
Capacity-based taxation of pan masala and specified tobacco products is determined by the number, type and capacity of installed pouch-packing machines. Searches at interconnected manufacturing and trading premises detected unregistered operations using undeclared machinery for clandestine manufacture and clearance of pan masala, scented jarda and gutkha without payment of GST, HSNS cess and central excise duty. Finished goods, raw materials, packing materials and machinery were seized. The manufacturing firm's proprietor was prima facie identified as managing the operation and was arrested under the applicable cess and central excise laws.
August 21, 2026
Show AI Summary
Technology risk oversight requires Urban Co-operative Banks to retain accountability while building shared and role-specific capabilities.
Urban Co-operative Banks must strengthen digital and risk-management capabilities as technology dependence exposes them to cyber threats, fraud, service-provider failures and common-platform vulnerabilities. Outsourcing critical systems does not transfer the bank's responsibility for oversight, safeguards and continuity. Boards and senior management must retain sufficient knowledge to supervise external providers effectively. Mission SAKSHAM supports role-specific, continuous capability building through physical and online learning, while collective infrastructure and shared expertise can supplement individual institutional capacity.
August 21, 2026
Show AI Summary
Foreign exchange market modernisation prioritises delegated decisions, customer transparency, digital workflows, local-currency settlement and accountable risk management.
Foreign exchange market modernisation advances a facilitative, principles-based framework based on delegated decision-making by Authorised Dealers, risk-based reporting, and customer-centric service standards. Authorised Dealers must apply clear internal policies, avoid unnecessary documentation, disclose charges, timelines and grievance mechanisms, and ensure consistent treatment of comparable transactions. Local-currency settlement requires viable trade corridors, competitive hedging, correspondent relationships and robust AML/CFT controls. Digital workflows, electronic trading and reporting infrastructure should improve transparency and resilience, while automated tools remain subject to explainability, review and data-protection safeguards.
August 21, 2026
Show AI Summary
Sugar price containment measures restrict stockholding, permit duty-free imports, and strengthen inventory verification to deter hoarding.
Sugar price containment measures include stock limits for dealers, consumption-based inventory restrictions for bulk consumers, duty-free raw sugar imports, and physical verification of mill stocks to prevent hoarding and artificial scarcity. Price increases are attributed to lower domestic output, festive demand, crop damage, tighter global supplies, and speculation rather than sugar diversion for ethanol. Earlier crushing is advised to improve seasonal availability, while the ethanol programme supports management of sugar surpluses, mill liquidity, and timely sugarcane payments.
August 21, 2026
Show AI Summary
Cross-border insolvency enforcement constrains asset recovery as Evergrande liquidation, founder asset confiscation, and audit-related claims continue.
Evergrande's insolvency process involves liquidation proceedings for its mainland property-development unit and its Hong Kong-listed holding company. Cross-border recovery is constrained by separate Hong Kong and mainland China legal systems, particularly because most operational assets are located in mainland China. Liquidators are pursuing asset-tracing and recovery measures against the founder and connected persons, as well as claims concerning pre-collapse audits. Investigations identified revenue overstatement through manipulated financial data. Creditor recoveries are expected to be limited due to substantial liabilities and constraints on asset realisation.
August 21, 2026
Show AI Summary
Foreign exchange reserves rose through higher currency assets and gold holdings amid measures to attract external forex inflows.
India's foreign exchange reserves increased during the reporting week, led by higher foreign currency assets and gold reserves. Foreign currency assets include the dollar-value effects of movements in non-US currencies held as reserves. Special drawing rights declined marginally, while the reserve position with the International Monetary Fund increased marginally. Concessional swap arrangements formed part of measures to attract foreign-exchange inflows, while earlier reserve movements were linked to rupee pressure and dollar-sale intervention in the foreign-exchange market.

News

Back

All News

Showing Results for :
Reset Filters
No Records Found

News

Back

All News

Showing Results for : Reset Filters

Future-Proofing the Indian Financial System (Inaugural Address by Shri Shaktikanta Das, Governor Reserve Bank of India - April 27, 2023 - Delivered at the Global Conference on Financial Resilience organised by the College of Supervisors in Mumbai)

April 28, 2023

Contents
Summary
Note

Note

-

Bookmark

Print

Print

I am very happy to be here among researchers and practitioners to participate in the Global Conference on Financial Resilience organised by the College of Supervisors of the Reserve Bank of India. I would like to convey my appreciations to the College of Supervisors (CoS) for organising this conference. I also congratulate the CoS for its accomplishments over the last two years.

2. In the context of the overall impact of the COVID-19 pandemic, the war in Ukraine and the recent banking sector events in the US and Europe on the financial sector, there is now renewed focus on issues of financial resilience and stability. Regulators and Governments across the world are now looking at these aspects with greater intensity. Adequacy of the existing regulations and supervisory systems are under fresh assessment. In this background, a global conference on financial resilience is very appropriate and timely.

3. The financial sector in a country and the individual entities therein like banks, non-banking financial companies (NBFCs) and other entities have to be resilient at all times. They should have the inner strength to withstand even the most stressful times. So far as India is concerned, the Reserve Bank of India has significantly strengthened its regulations and supervision of banks and other regulated entities in recent years. Our approach has been to enhance the resilience as well as the robustness of the financial sector so that individual entities effectively withstand stressful situations and continue to contribute to the process of economic development of the country. In my address today, I propose to highlight the expectations of the Reserve Bank of India from the stakeholders in the Indian financial system.

4. In most economies, central banks act as custodians of financial stability. Central banks are also empowered to act as a lender of last resort during financial crises. This historical function of providing emergency liquidity assistance to banks and other financial market institutions necessitates that central banks keep a close watch on banks and financial markets for signs of instability, if any. Moreover, monetary policy is implemented largely through banks and financial markets. The transmission of monetary policy to the real economy depends crucially on the smooth functioning of the financial markets as well as financial intermediaries like banks and NBFCs. It is in this context that the key and complementary functions of central banks such as setting of interest rates, liquidity management, regulation and supervision over the banking and other segments of the financial sector become more pronounced. These functions work together to support economic growth by maintaining financial stability and promoting responsible behaviour among financial institutions.

5. Let me now specifically turn to the concept of ‘resilience’ which is the theme of today’s conference. Systemic resilience depends both on the resilience of individual financial institutions as well as on the interdependencies among them.

6. A resilient future ready bank needs to be financially, operationally and organisationally resilient. To be financially resilient, a bank should have adequate capital buffers and be able to generate earnings even in times of severe macroeconomic shocks. It should also have adequate liquidity to meet its obligations in various situations. Therefore, financial resilience is closely linked to a bank’s business model and strategy. The Reserve Bank has, therefore, started looking at the business models of banks more closely. Aspects or deficiencies in the business model itself can spark a crisis in due course. We have not only prescribed regulatory norms for capital adequacy and liquidity ratios, but even gone beyond to nudge banks to build up capital buffers in good times and times of plenty. We did this during the COVID-19 pandemic when there was plenty of liquidity, the interest rates were low and the full impact of the pandemic on the financial sector was still highly uncertain.

7. The Reserve Bank has also put in place various prudential regulatory frameworks. These include capital adequacy requirements, asset classification and provisioning requirements, dividend distribution framework and liquidity management framework. In addition, the Reserve Bank also periodically deploys macroprudential measures to address system level build-up of risks. As a consequence of the measures taken by both the Reserve Bank and the banks themselves, the Indian banking system has remained resilient and has not been affected adversely by the recent sparks of financial instability seen in some advanced economies. This also comes out clearly in our recent stress test results.

8. The Gross NPA ratio for the Scheduled Commercial Banks (SCBs) was 4.41 per cent at end December 2022, down from 5.8 per cent as on March 31, 2022 and 7.3 per cent as on March 31, 2021. The CRAR at 16.1 per cent at end December 2022 is also much above the minimum regulatory requirement. Macro stress tests for credit risk indicate that SCBs would be able to comply with the minimum capital requirements even under severe stress scenarios.

9. Nevertheless, the recent events in the banking landscape of the US and Europe suggest that risks for an individual bank could crop up from segments of its balance sheet which might have been considered relatively safer. Hence, we expect the management and Board of Directors of each bank to continually assess the financial risks and focus on building up adequate capital and liquidity buffers even beyond the regulatory minimum for continued resilience and sustainable growth.

10. Let me now focus on operational resilience. This would mean that a bank should be able to deliver critical services even in the face of disruptions. Cyber risks and possible cyber-attacks are on top of the list so far as such disruptions are concerned.

11. Cyber risk has been identified as the foremost in top ten operational risks for 2023 based on a global survey1 of financial institutions. The Bank for International Settlements (BIS), while revising the Principles for Sound Management of Operational Risk in 2021, introduced a specific principle on ‘Information and Communications Technology (ICT) risk management’ reflecting the importance of this risk. Robust IT and information security governance would help in increased predictability and reduction of uncertainty in operations, minimise losses from information security related incidents and enhance operational resilience. Given the extensive level of outsourcing being done by the banks and also by other regulated entities, there is even greater need for ensuring that effective policies and practices are in place in this regard. Even the G20 finance ministers and central bank governors are focusing on risks arising from third party dependencies. The RBI has taken a slew of measures in the recent years with usage of advanced analytical and surveillance tools along with techniques like phishing simulation and cyber reconnaissance exercises to push for enhanced IT and cyber security governance processes in banks and other supervised entities. In the context of the growing exposure of Regulated Entities (REs) to various risks from dependency on third-parties which provide technology and IT-enabled services, the Reserve Bank has recently on April 10, 2023 issued comprehensive guidelines on Information Technology outsourcing2 by banks, NBFCs, and other REs.

12. The third component of resilience for banks and other financial institutions is to be organisationally resilient so that they anticipate risks early and absorb them efficiently. Organisations must have the capacity and resilience to protect themselves from adverse incidents and shield their balance sheets. To achieve organisational resilience, REs need to continuously evolve by standardising policies, processes, organisational culture and governance. They must also be flexible enough to encourage diverse ideas and innovations within the organisation.

Pillars of Reserve Bank’s Regulatory and Supervisory Strategy

13. An important element in our strategy of making the Indian financial system, including the banking system, future ready is the robust and enhanced regulatory and supervisory framework we have put in place in the last few years. Our present approach to regulation and supervision has been built essentially on three pillars.

14. First, one of our focus areas in recent years has been to strengthen governance and assurance functions within the Regulated Entities. The safety and soundness of the banking system relies critically on effective governance, so that the interest of all stakeholders, especially the depositors, are safeguarded. The essence of good governance is to build an environment of trust, transparency and accountability. Depositors, whose money represents an overwhelming part of banks’ resources, keep their life savings and hard-earned money with the banks. Protection of depositors’ money is, therefore, a sacred duty which has to be fulfilled through good governance. There cannot be any compromise on this. The Reserve Bank is very particular that the Regulated Entities have systems and processes that promote sound corporate governance. The assurance functions i.e. risk management, compliance and internal audits in banks are critical links between governance and business. Assurance functions assist the Board as well as the senior management in gauging whether the business operations of the bank or NBFC are being run in conformity with the policies and strategies laid down by the Board. The Reserve Bank has issued detailed guidelines for ensuring quality and independence of the governance and assurance functions. These areas are also subjected to intensive supervisory assessment.

15. Second, we have devoted our efforts to identifying and addressing the root causes of the vulnerabilities. Many a times, vulnerabilities arise from inappropriate business models adopted by banks and other financial entities. Over-aggressive growth strategies or mindless pursuit of bottomlines, for instance, are often a precursor to future problems. While we do not interfere with business decision making, Regulated Entities must demonstrate adequacy of internal controls and loss absorption capacity to match the risks that their business models may generate. Our approach is to flag deficiencies in this area to the senior management or to the Board of Directors of individual institutions for remedial action. We also remain engaged with external auditors and flag issues that are relevant for their role as the third line of defence. In recent times, our focus on ‘root cause’ has led us to mandate certain housekeeping hygiene such as automated identification of non-performing loans and provisioning, proper checks and balances in the use of Internal and Office accounts, implementation of Early Warning Systems (EWS) for preventing frauds and a host of IT and cybersecurity related controls, among others.

16. Third, within the Reserve Bank, we have considerably strengthened our supervisory analytics. We are increasingly employing data analytics – both macro and micro – to capture potential and emerging risks, identify outlier entities and the vulnerable large exposures of banks. Our onsite supervisors deep dive into areas red-flagged by offsite supervision teams. We are now focusing on the adoption of advanced analytical based technological solutions, including Artificial Intelligence/Machine Learning (AI and ML), for strengthening the internal supervisory processes.

17. We have a system of early warning signals that provide lead indications of risk build-up. Stress tests are also carried out on a continuous basis. These stress tests not only cover individual entities but also capture the system level stress.

18. While asset quality and capital position indicate resilience and robustness of financial institutions in the medium term, liquidity is often seen as the immediate cause of crisis. We monitor liquidity position of our entities very closely and aberrations, if any, are immediately taken up with the supervised entities for remedial measures. Thus, our whole approach to Supervision has been pro-active for minimising surprises, spotting concerns and addressing vulnerabilities early.

19. In essence, the unification of supervisory architecture within the Reserve Bank (i.e, combining the supervisory processes of commercial banks, NBFCs and urban cooperative banks (UCBs) into an integrated Department of Supervision); ownership-agnostic and risk-focused supervision; a shift from episodic to continuous supervision; enhanced off-site surveillance leveraging on data analytics and SupTech solutions; strengthened on-site supervision; root cause analysis of problems and identification of outlier entities; and deep-dive into vulnerable areas have been the major planks of our supervisory strategy.

20. The Reserve Bank has also taken several regulatory initiatives in recent years to strengthen governance, risk management, audit and compliance functions in NBFCs and UCBs. These include the new scale based regulatory framework for NBFCs issued in October 2021 and the revised regulatory framework for UCBs issued in July 2022. Even before these new regulatory frameworks were brought in, we had taken measures such as issuance of guidelines on appointment of Chief Risk Officers (CROs) and Chief Compliance Officers(CCOs) in large NBFCs; Liquidity coverage ratios for NBFCs with asset size of ₹5000 crore and above; risk-based internal audit (RBIA) norms for large NBFCs (with asset size of ₹5000 crore and above) and UCBs with asset size of ₹500 crore and above; and harmonising the guidelines on appointment of statutory auditors for NBFCs and UCBs with that of commercial banks.

Importance of Effective Internal and External Audits

21. I would now like to touch upon the criticality of effective internal and external audits for financial institutions. It is no secret that stability and growth of an economy and financial markets are dependent upon trust among stakeholders. To be future ready, banks and financial institutions need to earn the trust of their current as well as prospective customers. One cannot take the ‘trust’ for granted. With greater openness of the economy and faster transmission of information and capital flows on account of advent of technology, it has become even more necessary to ensure credibility and confidence in the system. Towards this cause, a robust assurance mechanism by way of internal audit is essential to provide independent evaluation and assurance to the stakeholders that the operations of a Regulated Entity are being performed in accordance with the prescribed policies and procedures. Statutory auditors also play a vital role in maintaining market confidence on audited financial statements. In banking industry, this public role is particularly relevant for financial stability, given that banks hold public deposits. Audit quality is key to the effectiveness of such public role. For these reasons, the Reserve Bank as the supervisor has a keen interest in the functioning of statutory auditors of the Regulated Entities. Wherever necessary, we engage with the external statutory auditors on issues of critical nature in individual banks and financial entities.

22. We have recently revised the guidelines for statutory branch audits of Public Sector Banks (PSBs) according to which a minimum of 70% of credit exposure of a bank is required to be covered. From FY 2023-24 onwards, the Board of Directors of PSBs will decide on the coverage of branch audit and selection of branches. While doing so, the Boards are required to keep in mind the specific characteristics of individual banks like the bank’s business and risk profile, geographical spread, degree of centralisation of processes, etc. We expect the Boards of banks to exercise the highest level of diligence while deciding on these issues. As regards statutory branch audit of Private Sector Banks (PVBs), we are doing a fresh assessment of the quality and coverage of such audits.

Skill and capacity building in the Reserve Bank

23. In the Reserve Bank we attach a lot of importance to skill building and capacity development of our employees. We have been strengthening the Department of Supervision both in number and quality. This is important as effective supervision requires specialised skills and mature judgement. In this context, we expect the College of Supervisors to keep on improving its training methodologies, adopt more case study-based teaching, have more practical sessions in its training programmes, and develop objective assessment of the impact of its training interventions. The feedback received from trainees may be used to improve programme content and fill the gaps identified. The training programmes may also strike a balance between teaching hard technical skills and promoting soft skills such as leadership, decision making, time management and conflict resolution.

24. The rapid developments and innovations in the financial system, especially in the areas of fintech and digital products pose new opportunities as well as risks. These may affect financial intermediation, payment systems, cyber security and consumer protection. We have to continue monitoring and assessing the implications of these emerging trends, while also developing our own capabilities and frameworks to effectively respond to these challenges.

25. In recent times, we have seen a proliferation of digital lending by NBFCs, FinTechs and loan apps. Such lending also brought with it certain challenges, especially with regard to fair practices and consumer protection. To address these challenges, the Reserve Bank has laid down comprehensive guidelines for digital lending in September 2022. These guidelines aim to ensure that lending activities are conducted by the REs and their partners such as Loan Service Providers (LSPs) in a prudent, fair, transparent and responsible manner.

Conclusion

26. To sum up, the Reserve Bank remains committed to future-proofing the Indian financial system and provide the required support for sustainable growth. I am confident that this Global Conference on Financial Resilience organised by the College of Supervisors with participation of experts from India and abroad will add considerable value to the body of knowledge in the area of resilient financial systems. I have been informed that many research papers on identified themes have been received and select papers have been made part of the maiden issue of the Journal of Financial Resilience, which was released today. I am sure the deliberations during the Conference would provide a lot of food for thought and bring new perspectives on the evolution of financial regulation and supervision.

I wish the conference all success !

Thank you.

----

1 Source: Risk.Net

2 Master Direction on Outsourcing of Information Technology Services

Topics

Acts Income Tax