RBI Deputy Governor Raises Supervisory Concerns
The Reserve Bank of India (RBI) has identified several supervisory concerns in the functioning of asset reconstruction companies (ARCs), according to Deputy Governor Swaminathan J. Speaking at a conference in Mumbai attended by heads and representatives of 27 ARCs, he emphasized the theme of ‘Governance in ARCs – Towards Effective Resolutions.’ This conference is part of a series of supervisory engagements the RBI has organized over the past year with its regulated entities.
Swaminathan underscored the importance of sound governance and urged ARCs to adopt a “regulation plus” approach, ensuring compliance with both the letter and the spirit of the regulations. He highlighted that boards should prioritize assurance functions such as risk management, compliance, and internal audit, which are vital for identifying and mitigating risks, ensuring legal compliance, and protecting the organization’s reputation.
Swaminathan stressed the necessity of setting the right tone from the top to foster a culture of integrity and ethical conduct. In his keynote address, Deputy Governor M Rajeshwar Rao noted that robust governance is essential for ARCs to establish a strong business model. He also highlighted the importance of responsible conduct in the recovery process, urging ARCs to follow transparent and non-discriminatory practices in line with the comprehensive fair practice code (FPC) established by the RBI. The conference featured technical sessions on regulatory aspects and supervisory expectations led by the chief general managers of the Reserve Bank.
