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India cenbank deputy flags concerns over asset recast cos' functioning

FILE PHOTO: FILE PHOTO: A security guard's reflection is seen next to the logo of the Reserve Bank Of India (RBI) at the RBI headquarters in Mumbai

MUMBAI (Reuters) - The Reserve Bank of India (RBI) has seen "several" supervisory concerns in the functioning of asset reconstruction companies (ARCs), a deputy governor at the central bank said on Friday, urging such firms to adopt appropriate risk management strategies.

Swaminathan J urged ARCs to adopt an approach where there is compliance "with both the letter of the regulation and also its spirit," the central bank said in a statement.

Swaminathan was addressing a conference in Mumbai for directors, and chief executive officers of ARCs, as a part of supervisory engagements of the RBI, according to the statement.

The RBI has increased supervision of regulated entities to prevent systemic risks and to ensure that regulations are followed.

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Boards of ARCs should give due importance to assurance functions, such as risk management, compliance and internal audit, Swaminathan said. Such functions play a critical role in identifying and mitigating risks, ensuring compliance and safeguarding the organisation's reputation, he added.

ARCs should showcase "responsible conduct" in the recovery process, Deputy Governor Rajeshwar Rao said at the same conference.

Rao also emphasised that ARCs should follow transparent and non-discriminatory practices in line with the comprehensive fair practice code put in place by the RBI.

(Reporting by Siddhi Nayak; Editing by Eileen Soreng)