RBI asks small finance banks to focus on increasing capital base

Mumbai, Jun 10 (PTI) The Reserve Bank on Friday asked small finance banks (SBFs) to continue to evolve in tune with the differentiated banking licence given to them with proportionate growth in their capital base.

In a statement, the RBI said deputy governors M K Jain and M Rajeshwar Rao held discussion with Managing Directors (MDs) and Chief Executive Officers (CEOs) of SFBs.

Earlier in the meeting with heads of SFBs held in August last year, 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.

"In the meeting held today (Friday), 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," RBI said.

SFBs, the central bank said, 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.

The Reserve Bank took note of the suggestions and inputs from the participants, the statement said.

Executive directors of Supervision and Regulation and other senior officials of the Reserve Bank also attended the meeting.