Banks need to improve risk management: S&P

The agency said that governance and transparency issues in the Indian banking system was a negative factor.

With a slew of financial scams unearthing, global credit agency Standard and Poor's (S&P) has suggested banks to improve risk management and corporate governance practices.
 
"As a number of banks in India confront serious governance and risk issues, the 'tone at the top' is crucial. Leadership groups in Indian banks need to ensure that they enhance the risk culture, reputation, and financial strength of banks," S&P Global Ratings credit analyst Michael Puli was quoted as saying.
 
The agency said that governance and transparency issues in the banking system was a negative factor.
 
Speaking on the re-appointment of Axis Bank MD & CEO Shikha Sharma, S&P said the decision by the Reserve Bank of India to not approve extension was due to a number of risk management and governance issues that have emerged at the bank. 
 
The concerns included deterioration in asset quality and under-reporting of non-performing loans.
 
Axis Bank board had requested the apex bank to approve the reappointment of Shikha Sharma for six months ending 31 December 2018. 
 
This offer was rejected after the central bank declined an earlier proposal to give her a three-year term ending 30 June 2021.
 
As regards ICICI Bank, it said the investigation is underway and added that if allegations against the management are proved, the bank's reputation might be hit and the private lender will be exposed to legal and financial risk.
 
According to reports, ICICI Bank approved loans to the Videocon Group in 2012, allegedly because its chairman Venugopal Dhoot had business dealings with the husband of bank CEO Chanda Kochhar.
 
Source: Media reports

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