Attributing frauds in the banking sector to absence of effective controls, RBI Governor Shaktikanta Das Saturday said focus of the central bank in coming months will be on corporate governance reforms in the banking and non-banking space to improve transparency and accountability.
The set of corporate governance reforms proposed by Das include streamlining of the board-level appointment process, development of effective risk management systems, creation of a pool of independent directors and setting up mechanism to evaluate the performance of senior functionaries.
“it has been observed that most bank frauds can be traced to absence of effective controls. An essential element of an effective system of internal control is a strong control mechanism. It is the responsibility of the Board of Directors and senior management to emphasise the importance of internal control through their actions and words.
“Banks should regularly reorient and train their personnel so that they fully understand the importance of internal controls in their respective stations. The boards of banks should specifically pay attention to creating and sustaining…
