Mumbai, April 8 The Reserve Bank said on Wednesday that the minutes of HDFC Bank's board meeting and other records are reviewed as part of the supervisory exercise, and reiterated that the largest private sector lender has not been found wanting in terms of ethics and governance.
"I would like to reiterate that at no point during our supervision or after examining their records, any issue related to governance or conduct came to our notice. As part of our regular supervision, board minutes are also reviewed, and copies are provided to us," RBI Governor Sanjay Malhotra said, replying to a specific question about HDFC Bank.
It is worth noting that the resignation letter did not mention any specific reason beyond a difference in ethics and values, and the bank's other board members also said they were "confused" because Atanu Chakraborty did not cite any particular instances during their discussions either.
This led to questions about the effectiveness of the current rules that resulted in the resignation of the bank's former chairman Atanu Chakraborty last month, which was followed by a sharp correction in share prices. The RBI brass on Wednesday said there is no need for a review.
"As for whether there is a need to change guidelines or directions, at present, we do not feel such a need. However, if in the future it is felt that any change or new rule is necessary, and you know that Sebi already has directives in this regard, then we will not hesitate to introduce additional directions if required," the governor said.
Deputy Governor Swaminathan J added that the central bank is not averse to driving changes in the rule book, but added that it does not see merit in the same.
"At this point in time, there is no event that warrants a macro prudential measure or a regulatory tweak," he said.
Meanwhile, commenting on instances of fraud being reported with lenders such as IDFC Bank and Kotak Mahindra Bank in the context of state government accounts, Malhotra opined that this is a criminal activity carried out by a group of colluding individuals, and added that there is no need to change any rules to check such activity.
"I want to assure everyone that the banking system is very resilient, it's very safe and strong," the governor said.
Swaminathan said that these are entity-specific developments that do not pose any systemic risk at this point in time.