RBI tells banks to bargain for more risks

MUMBAI: It is a bit of a rude awakening for Indian banks. Having long been used to addressing certain traditional risks relating mainly to operational areas, they have been oblivious to reputational and legal risks, which most prudent firms address. All that is set to change.
The banking regulator — Reserve Bank of India — now wants local banks to recognise and manage risks posed by actions that could have an impact on a bank’s reputation or brand, besides legal risks that could arise from contracts, which may not be enforceable and in the form of adverse judgements. What this would mean is that banks will have to set aside more capital to factor in such risks on the lines of what their counterparts in other markets have done.

Read More