Business · India Bureau
Sound underwriting and risk pricing essential for banking sector growth: RBI
Reserve Bank of India Deputy Governor Swaminathan J has emphasized the importance of robust underwriting standards and appropriate risk pricing in driving sustainable growth across the banking sector. Strong deposit bases and effective governance frameworks are equally critical, he said.
LSN India ·
The RBI's number two official underscored that Indian banks must prioritize sound underwriting practices as a cornerstone of long-term stability and profitability. Speaking on the sector's growth trajectory, Swaminathan J stressed that rigorous credit assessment and disciplined lending standards remain fundamental to managing asset quality and maintaining depositor confidence.
Appropriate risk pricing emerged as another key pillar in the Deputy Governor's roadmap for sustainable banking expansion. Financial institutions must accurately price credit risk across their portfolios to ensure returns adequately compensate for potential losses while remaining competitive in India's dynamic lending market.
Stable deposits and robust governance frameworks complete the essential framework for healthy banking growth, according to Swaminathan J. Mobilizing reliable deposit bases shields banks from volatile funding conditions, while strong internal controls and transparent governance protect shareholder interests and systemic stability.
The remarks align with the RBI's broader supervisory approach, which continues to emphasize prudential norms and risk management as the banking sector navigates economic uncertainties and rising credit demand across India's economy.