The Changing Role of Reserve Bank of India in Bank Supervision and Corporate Governance with the Introduction of Risk Based Parameters

Abstract

The role of RBI has undergone through a rigorous change over the period of time. Earlier, it was a common perception that the roles of RBI is confined to credit control by changing different key policy rates depending on the economic environment of the national as well as international level. In the recent past the global banking practices faced a number of jugglery and malpractices such as window dressing, over and undervaluation of mortgage and collateral, overpricing the default risk and under pricing the credit risk. Basel III is a recently developed area of the banking sector where major impetus was provided towards the liquidity risk. The objective of the research paper is to identify the changing role of RBI, interpret the changes which have taken place with the implementation of Basel norms, analyze the role of the central banks as controller of the liquidity of the nation, demonstrate the challenges of measuring, mitigating and managing of different type of risks, develop the strategies to combat against non performing assets and critically analyze the corporate governance framework of the banks. The proposed research paper will incorporate the secondary information available on Risk management in banking, scope and direction of the successive Basel norms and corporate governance practice followed by Indian banks. This paper will focus a paradigm shift in the role of RBI. It will provide a new dimension in the literature of corporate governance, risk management in banking and ethical obligations of the banks as well as successful implantation of International Basel Norms on capital adequacy framework by issuance of relevant norms and guidelines.