In the wake of recent concerns over accounting lapses and isolated failures, Reserve Bank of India (RBI) Governor Sanjay Malhotra asserted on Wednesday that the Indian banking system remains “safe, secure, and robust.” Addressing queries about systemic risks following issues at IndusInd Bank, New India Cooperative Bank, and Aviom India Housing Finance, Malhotra labelled these as “episodes” rather than signs of broader institutional failure.
System Remains Strong and Resilient
Without referring directly to any single institution, Governor Malhotra emphasized the strength of India’s financial ecosystem. “At a system level, we are very, very safe, secure, and robust. The system is resilient,” he stated.
India’s banking structure includes close to 10,000 non-banking financial companies (NBFCs) and around 1,500 cooperative banks. The RBI Governor noted that the number of failures among these institutions over the past 7–8 years remains marginal when viewed against the vast scale of the financial system.
“So these things will happen. Our effort is to minimise the impact… I would not call them total failures; these are episodes,” he clarified.
Also read: Banking System Sees ₹89K Cr Surplus
Multi-layered Oversight and Accountability
Governor Malhotra credited the RBI’s multi-layered regulatory architecture for maintaining system stability. This includes regular inspections, compliance audits, and internal surveillance mechanisms that continuously assess financial health and operational integrity.
Deputy Governor Swaminathan Janakiraman, echoing these sentiments, added, “We never waste a good crisis—there will be learnings.” He assured that the RBI would act appropriately against any lapses and reiterated the central bank’s commitment to safeguarding customer interests.
IndusInd’s Accounting Discrepancy
The reassurance from the RBI comes in the aftermath of IndusInd Bank’s disclosure on March 10 of accounting discrepancies related to its derivatives portfolio. The estimated Rs 2,100 crore variance may affect about 2.35% of the bank’s net worth. Despite this, the RBI has moved quickly to mitigate risks and ensure customer protections remain intact.
In conclusion, RBI leadership emphasized the resilience of the Indian banking system and affirmed their ongoing efforts to minimize disruptions and uphold financial stability.
