Need robust management of risk: RBI Deputy Governor M Rajeshwar Rao

Mumbai: A robust risk management framework is needed to ensure a smooth interaction between the different financial players to help de-risk balance sheets and drive economic growth, Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao said Thursday.

Rao said that permitting a diverse set of participants in the market may help make it more vibrant and efficient. But it is in the market's collective interest to know the risk, assess it adequately, and acquire the capabilities to manage it.

He was speaking at a seminar organised by IIM Kozhikode.


"As a regulator, we do acknowledge that risk cannot be avoided. After all, risk-and-reward dynamics is the soul of the entire edifice of finance. So, some risks must be taken," said Rao, who is in charge of the departments of regulation, enforcement and risk monitoring.

Rao said that the tools for credit risk management have evolved but to facilitate transfer of risks between entities fairly and transparently several policy enablers have been put in place by the RBI.