Bank boards have been urged by RBI Governor Shaktikanta Das to strengthen their internal governance frameworks in order to combat unethical practices such as mis-selling and inadequate KYC verification.

During the Conference of Directors of Private Sector Banks, Das emphasized the importance of carefully structuring staff incentives to discourage unethical behavior.

He cautioned that although such practices may result in short-term profits, they carry significant long-term risks, including reputational damage and potential financial penalties.

Das also highlighted the current landscape of the Indian banking sector, which is filled with both opportunities and challenges, emphasizing the need for robust governance to mitigate these risks.