Highlighting need to look at the deeper issue of governance at the banks, the International Monetary Fund’s (IMF) deputy managing director Tao Zhang has said that banking reforms like insolvency code and recapitalisation are not enough for a lasting impact and they should be accompanied by governance reforms particularly for public sector banks (PSBs).
IMF official also expressed need to improve the internal controls, as it is crucial not only for improving banks but also financial stability. He also suggested banks to improve their balance sheets on a priority basis, stressing that the asset quality situation of the domestic banks has deteriorated compared to their peers elsewhere.
Tao Zhang further noted that Indian financial regulators should focus on monitoring and regulating services instead of only institutions and added that the country should focus on rapidly developing the sector so that efficiencies get enhanced but also safeguard against risks and also fight misconduct. He said the things like big data, artificial intelligence, cloud computing, smart contracts and blockchain can help the sector to improve its efficiency.