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The Reserve Bank of India (RBI) has indicated that it will relax banks in branch audit for 2019-20 as they face branch network management challenges due to blocking of the coronavirus.
RBI Governor Shaktikanta Das met Saturday with the heads of major banks, both public and private, in two separate sessions via video conference to review the current economic situation, the liquidity of financial companies not banking (NBFC) and the issue of the moratorium on loan repayments, among other things.
Das reportedly rebuked banks for not doing enough on NBFC loans and liquidity. He was also upset by the failure of Targeted Long Term Repo 2.0 Operations (TLTRO 2.0), but there were no warnings or instructions. “The RBI can only urge,” said one person who was present at the meeting. The RBI was also engaged in preparations for conducting business after the closing.
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The meetings were also attended by Deputy Governors M D Patra and
M K Jain, in addition to other senior central bank officials, the RBI said in a statement.
According to the statement, the RBI governor took stock of “credit flows to different sectors of the economy, including liquidity to NBFC, microfinance institutions (MFIs), housing finance companies (HFCs) and mutual funds.”
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Senior bank executives aware of the deliberations said banks, including the State Bank of India, were examining proposals to provide liquidity to NBFC, HFC and MFIs. Part of the assistance will be made without using RBI’s liquidity windows (TLTRO), as banks are left with a huge surplus of money, they said. Preparations for banks’ fourth quarter and fiscal 20 results were also debated.
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You can’t do everything remotely and physical movement of auditors to branches is necessary, bank sources said, adding that the emphasis was placed on doing it with due care to minimize health risks.
There are some relaxations in terms of the number of branches that will be covered in the audit plan. The Association of Indian Banks (IBA) has made some suggestions to the banking regulator about the audit activity. However, the RBI did not specify steps in this regard, the bankers said.
The governor appreciated the banks’ efforts to guarantee normal to near-normal operations during the closure and emphasized post-closing credit flows, including working capital, “with special emphasis on credit flows to MSMEs,” according to the release.
The banks have expressed that they will adopt a segmented approach to expand operations in the post-closure phase, and will first focus on green areas.
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