Kotak Mahindra Bank CEO and MD Uday Kotak. Photo: Mint
Kotak Mahindra Bank CEO and MD Uday Kotak. Photo: Mint

Uday Kotak says RBI board’s decisions positive for economy

The RBI board has decided to restructure the scheme for MSME borrowers with credit facilities of up to 25 crore and give banks concession on capital adequacy norms

Mumbai: Kotak Mahindra Bank chief executive officer and managing director Uday Kotak on Wednesday welcomed the decisions taken at the Reserve Bank of India’s recent board meeting, and said the outcomes will be positive for the economy.

After a nine-hour meeting held on Monday, the RBI board took a slew of steps, including a restructuring scheme for MSME borrowers with credit facilities of up to 25 crore, and giving banks some concession on capital adequacy norms.

“I am very happy that there are positive outcomes which will ultimately help the economy. I am glad that the board had a debate and I respect the judgement of the board," Kotak said on the sidelines of the CII HR conclave.

The RBI board announced plans to set up a committee to examine the economic capital framework of the RBI. It also decided to refer the issue of relaxing prompt corrective framework (PCA) for weak banks to the Board for Financial Supervision (BFS) of RBI.

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The board, while deciding to retain the capital-to-risk weighted assets ratio (CRAR) at 9%, agreed to extend the transition period for implementing the last tranche of 0.625% under the capital conservation buffer (CCB) by one year, up to March 31, 2020.

Domestic rating agency Crisil, said the decision to extend the timeline for implementation of the last tranche of CCB under Basel III capital regulations could reduce the burden of public sector banks in the current fiscal by 35,000 crore.

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Earlier, while delivering his speech, Kotak said the role of boards was to ensure long-term leaderships.

Talking about variable compensation given to employees, he said a better balance in terms of how to manage compensation was extremely important. One of the biggest challenges the financial sector was facing was that of poor risk management, which led to poor practices on financial management and accounting, he added.

Also read: Section 7 of RBI Act on the backburner but threat remains

This story has been published from a wire agency feed without modifications to the text. Only the headline has been changed.

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