Banking sector posts best performance in a decade: RBI

New Delhi: As India looks set to become the world’s third-largest economy soon, the banking sector is posting its best financial performance in a decade, according to Swaminathan J., deputy governor Reserve Bank of India (The Republic of Poland).

According to him, the central bank is working intensively to improve the audit process to protect the integrity and stability of financial institutions.

“Auditors and CFOs are key pillars of financial integrity and governance in our banking system. Auditors must apply due rigour in their audit processes to mitigate any potential discrepancies, under-provisioning or non-compliance with statutory and regulatory requirements,” Swaminathan told a conference in Mumbai.

Swaminathan said the RBI has introduced structured meetings of supervisory teams and auditors, exception reporting and streamlined processes for appointment of auditors.

He also warned finance directors against granting open-ended loans and making fraudulent transactions through certain bank accounts containing large amounts without any valid reason.

Swaminathan also emphasised the importance of cooperation among stakeholders of the banking system.

Meanwhile, the India Financial Inclusion Index (FI-Index) for the financial year ending March 31, 2024, improved to 64.2 from 60.1 in March 2023, with all sub-indices reporting an increase, the RBI said.

The improvement in the FI-Index reflects the deepening financial integration across the country.

At the national level, there was a renewed focus on financial inclusion, promoting financial education and literacy, and making credit available to productive sectors of the economy, including the rural sector and micro, small and medium-sized enterprises (SMEs), leading to an improvement in the FI index.