RBI's Fresh Directives To Banks For Easy Management Of Risk, Minimize Disruptions | New Guidelines

Regulator today as well because the RBI has now released a fresh set of directives and this is essentially for financial services offered by banks or non banking financial companies to manage risk when it comes to daily operations. It highlights the disruptions that could threaten a financial institution survival. It could impact customers and affect the entire financial system stability. Let’s find out what those directives from the RBI are. My colleague Asta is joining us on this. Asta, what do we know now as far as banking regulator is concerned on how they’d like to ensure this kind of risk management? Well, the Reserve Bank of India emphasizes on managing the risk from all across the financial domain. Hence it came up with a note, a directive note how to manage and access the risks in all the financial institute containing banks, NBFCS and also the credit unions as well. So, the new directive which is given by the RBI, the new guidelines focuses on the principle on the third party relationship. Also, the new guidelines which are given by the RBI has also a separation principle for the external and internal management of the Financial Institute. Whenever there is a risk, a company shall maintain a separate mapping for internal and external issues as well. Also, the guidance note highlights that the disruption can threaten the financial institution, can have impact on customers. Hence it can affect the whole financial stability of a system. Hence, it should be managed really properly. Also, the Financial Institute needs to identify and access these risks as soon as possible, develop strategies to minimize minimize the effects and also ensure that critical operations are followed and the framework is transparent. So this guideline replaces the 2005 guidelines which were there and earlier the guidelines of 2005 only emphasized on only the banks, the commercial banks. But now it covers all the financial institution it manages in focuses to manage all the risk from all the financial domains whether its bank NBFCS or credit unions as well. So this is the main motive of RBI to keep the eye on all the management of financial risk of banks. And financial institute should have a strong framework to place and identify and access the manage operations as well so that they can see the management, The management can see the risk which is coming on the way to the financial institute can assess them and solve it as soon as possible to maintain the transparency of the institutions. ASA thanks very much for walking us through the new directives set by the RBI when it comes to risk and management on daily operations whether its banks, Oregon, non banking, financial companies. If you like this video then like, share and subscribe to ET Now.