Reserve Bank Deputy Governor M K Jain has stated that financial institutions should be board-driven and not be dominated by individuals, as this could lead to unfavourable outcomes.
He underlined the importance of an effective and robust financial system for the country's economic progress and social well-being in his keynote talk at CAFRAL, a Centre promoted by RBI. "The governance framework that surrounds individual players in the financial system plays a critical role not only in terms of value creation for various stakeholders, but also in ensuring the board's oversight of risk appetite and risk culture of individual institutions," he said during his presentation on the "Importance of Governance and Assurance Functions in Financial Institutions."
He also stressed that financial organisations should be led by a board of directors rather than being dominated by individuals. "It is critical to ensure that financial institutions are led by their boards of directors and do not become dominated by individuals. This has been proved to have unfavourable implications in the past "Jain explained. He advised the board members to concentrate on strategic and significant issues and work together.
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