Reserve Bank of India (RBI) Governor Shaktikanta Das on Thursday said businesses should avoid aggressive short-term reward-seeking culture without considering the excessive risk build-up in their balance sheets.
Mr Das said that doing business involves taking risks. But before taking the risk, one has to consider the upside and downside carefully.
Delivering a speech at the Iconic Week celebrations, as part of the “Azadi Ka Amrit Mahotsav”, Mr. Das said, “Businesses should avoid an aggressive short-term reward-seeking culture regardless of the excessive risk build-up in the balance sheet.” ‘, to mark the 75th anniversary of independence.
The event was organized by the Central Board of Indirect Taxes and Customs (CBIC) here.
Common features of some unfair business models or strategies that have come to the notice of RBI include improper funding structure, creation of asset liability mismatches, which are highly risky and not sustainable, he said.
Further, unrealistic strategic assumptions, especially excessive optimism about capabilities, growth opportunities and market trends can lead to poor strategic decisions, the RBI governor said.
He said that the RBI has made several disclosures mandatory for its regulated entities to ensure that they fully disclose all important information in their financial statements.