Banks need to improve risk infrastructure, says SBI boss

SBI Chairman Rajnish Kumar on Thursday said public sector banks (PSBs) need to improve their corporate and risk governance infrastructure to mitigate the challenges related to operational risk.

“PSBs need to improve their governance infrastructure. If there are any deficiencies in corporate governance or risk governance architecture, they need to be looked into. And whatever are the gaps they need to be filled into as quickly as possible,” Kumar said on the sidelines of an event here. He was responding to a question on banking frauds that have been coming to the fore now.

Talking about State Bank of India, Kumar said SBI has a good risk mitigation architecture.

On consolidation of overseas branches of PSBs, he said it is nothing new, in fact it is already on the agenda of the government to cut down operational costs.

The rationalisation of overseas operations of the PSBs, he said, has nothing to do with the Nirav Modi fraud case in which Punjab National Bank was cheated of Rs 12,717 crore.

“This rationalisation of branches whether overseas or domestically has been on the agenda of the government already. And we had done this exercise at the month end that banks need to bring down operational cost," he said.

For the last three years, SBI has been rationalising overseas branches, he said, adding that Paris branch was converted into a representative office, while the Jeddah office was closed down.

“The question is the kind of cost which we incur. Whether the volume of business justifies having a presence in that location,” Kumar said.

The SBI chief further said that regulatory requirements across the world are increasing and ‘we have to rationalise and we have no choice’.