Reserve Bank of India Governor Sanjay Malhotra on Wednesday said the country’s banking system remains strong and safe, even as recent developments in some private sector banks raised concerns among investors.
Speaking at the post-monetary policy press conference, the Governor said such incidents are limited and do not reflect any wider problem in the banking system.
“I want to assure everyone that the banking system is very resilient, it’s very safe, strong,” he said.
He added that strict rules and regular checks by the help keep the system stable.
“The number of regulations whether it’s the conduct, governance, prudence, liquidity along with our supervisory framework, they keep the banking system very healthy and robust,” he said.
“These are episodes these are more in the nature of crimes,” he added, indicating that such cases are isolated.
The Governor also addressed concerns around HDFC Bank following the on March 18 and the fall in its share price.
Malhotra said the RBI had reviewed the situation closely.
“The Reserve Bank did not come across any governance or conduct-related issues during supervisory inspection of HDFC Bank,” he said.
He added that the RBI had also examined the minutes of the bank’s meetings and found no issues of concern.
“The RBI did not find anything of material concern,” he said.
The central bank had earlier said in its March 19 statement that there were no concerns regarding the bank’s functioning.
“HDFC Bank is a Domestic Systemically Important Bank (D-SIB) with sound financials, professionally run board and competent management team,” the RBI had said.
“Basis our periodical assessment, there are no material concerns on record as regards its conduct or governance.”
The Governor mentioned that the broader banking system remains stable despite global challenges.
He said there are no systemic risks to the profitability or health of banks, even as global uncertainty remains due to the West Asia conflict.
Malhotra reiterated that India’s banks are well-regulated and closely monitored, which helps maintain stability even during uncertain times.
On interest rates, the Governor indicated that the current low interest rate environment could continue for some time.
He also said that recent steps taken by the RBI to manage volatility in the rupee are temporary and will not remain in place forever.
The RBI’s comments are aimed at reassuring investors and depositors that the banking system remains safe and stable.
While individual developments in banks may create short-term concerns, the central bank said these are isolated cases and do not point to any larger risk in the system.