The scope of the Board’s policy making function has enhanced to cover a broad range of areas, such as systems and control, risk management, human resources, credit, investments, etc. Professional management is appointed to carry on the banks’ operations. Furthermore, internal control system has been strengthened in banks through setting up of audit committees and internal audit functions.
But banks also take high risk. Banks also make fat provisions for debts that have gone bad. Banks also need to build reserves and strengthen their balance sheets. Strong and sound balance sheets make strong banks. The rate of growth of pre-tax profit of commercial banks is observed to be lower than the growth rate of their total assets.