Strengthen corporate governance: RBI to banks

CHENNAI: The Reserve Bank of India today cautioned banks that it will have to step in if they did not strengthen their corporate governance.

"You (banks) have to strengthen the Corporate governance. If you dont do, micro management will come from the owner (RBI)," RBI Deputy Governor K C Chakraborty told reporters on the sidelines of banking conference 'Bancon 2011' organised by Indian Bank's Association and Indian Overseas Bank here.

He said "as a regulator its my job to caution. We must strengthen our corporate governance."

Asked whether a monetary and fiscal action was required to contain food inflation, he remained affirmative and said all inflation required monetary and fiscal measures.

"You see if inflation is going up it absolutely requires monetary and fiscal measures. How much measure has to be taken will be decided by the Governor of Reserve Bank and the fiscal position will be decided by the Finance Minister and the Parliament.", he said.

On Thursday the food inflation rose to 12.27 per cent while headline inflation remained at 9.27 per cent in September.

Earlier in his address at the conference, he said Indian banks were making lot of money riding on the customers as in the last 40 years Indian banking industry has not seen any competition. "Indian banking is the second largest profitable business in the world...",he said.

Banks not only need to know about their customer norms, but also their businesses and the risks involved, he said.