look news india
New Delhi: Credit rating agency S&P Global Ratings said the Reserve Bank of India is showing serious commitment to improving governance and transparency in the financial sector and its measures are making banks stronger and more transparent.
The recent measures by the Reserve Bank will reduce overzealousness of financial institutions, enhance the culture of compliance and protect the interests of consumers. However, this will also increase capital costs for organizations. IIFL Finance Ltd under RBI measures. and JM Financial Products Ltd. These include banning banks from giving gold loans and loans against shares respectively.
According to S&P, the RBI barred HDFC Bank from accepting new credit card customers in December 2020 after repeated technical glitches. The rating agency said these measures are separate from nominal financial penalties imposed for rule violations.
S&P Global Credit Analyst said, the Reserve Bank has shown its commitment to strengthening the financial sector. However, there are also risks associated with these regulatory measures. “This could hamper growth and increase the cost of capital for financial institutions.”
Rating agencies are strict on risk non-compliance, customer complaints, data privacy, governance, Know Your Customer (KYC) and anti-money laundering issues.
Governance and transparency are major weaknesses for the financial sector in the country. The new measures by RBI are building a stronger and more transparent financial system.