Reserve Bank of India governor Shaktikanta Das said on Thursday that companies should avoid adopting an aggressive, short-term reward-seeking culture without regard for the build-up of excessive risk in their balance sheets.
Das said that doing business involves taking risks. But before taking the risk, the pros and cons should be carefully considered. “Companies should avoid an aggressive, short-term reward-seeking culture without regard to the build-up of undue risk on the balance sheet,” Das said during a speech at the Icon Week celebrations as part of the ‘Azadi Ka Amrit Mahotsav’ ‘, on the occasion of the 75th anniversary of independence.
The event was organized here by the Central Council for Indirect Taxation and Customs (CBIC). The commonalities of some of the inappropriate business models or strategies that have come to the attention of the RBI include an inappropriate funding structure, build-up of asset-liability mismatches, which are highly risky and unsustainable, he said.
In addition, unrealistic strategic assumptions, especially excessive optimism about capabilities, growth opportunities and market trends, can lead to poor strategic decisions, he noted. material information in their financial statements. Tarun Bajaj, Revenue Secretary, and Vivek Johri, Chairman, CBIC also attended the event.