RBI Governor outlines collaborative approach to digital regulation
Reserve Bank of India Governor Sanjay Malhotra emphasized a collaborative approach between regulators and regulated entities to ensure systemic resilience in the digital age. He highlighted five key messages for adapting supervision and regulation.
Partners in resilience, not adversaries
Governor Malhotra stressed that the RBI views its regulatory and supervisory roles as collaborative, not adversarial, with regulated entities.
He asserted that the long-term objectives of both parties are identical: to ensure growth, stability, integrity, and credibility of the financial system.
"We are partners in the nation's development," Malhotra stated, advocating for a balance between growth and systemic stability, and between responsible innovation and consumer protection.
Regulation, he noted, functions best when banks perceive supervisors as partners in resilience rather than fault-finding inspectors, particularly crucial for India's bank-centric financial intermediation.
Data-driven supervision and customer focus
The Governor highlighted the importance of effective data utilization, noting improvements in data quality following the introduction of the Supervisory Data Quality Index (SDQI).
He called for stronger analytics and supervisory dashboards to enhance off-site surveillance, aiming for near real-time rather than periodic monitoring.
Malhotra also underscored customer-centricity as a cornerstone of a sustainable financial system, emphasizing the need for guardrails against opaque pricing and inappropriate recovery practices in digital channels.
He urged collaboration to combat rising digital frauds by building analytics to detect mule accounts and suspicious transactions proactively.
A timely call for agile oversight
Malhotra's address provides a crucial framework for navigating the complexities of financial supervision in an increasingly digital world.
While acknowledging the fundamental principles remain, his emphasis on collaboration and data-driven agility is highly relevant.
The speech effectively balances the need for innovation with robust consumer protection and systemic stability, offering a forward-looking perspective for the Indian financial sector.