RBI Governor Emphasizes Governance and Regulatory Adherence in Financial Sector

In a recent announcement, the Reserve Bank of India (RBI) Governor, Shaktikanta Das, highlighted the critical importance of governance quality and adherence to regulatory guidelines by banks, NBFCs, and other financial entities. He emphasized that these institutions operate with public funds, such as deposits from bank customers and investors in financial instruments.

Governor Das underscored that financial stability is a collective responsibility of all stakeholders, and the RBI is committed to engaging constructively with financial entities to simplify regulations and reduce compliance burdens.

To achieve this goal, the RBI has implemented recommendations from the Regulations Review Authority (RRA 2.0) and established Internal Review Groups to streamline and rationalize regulations. Over a thousand circulars have been withdrawn, and a new Master Direction has been issued to harmonize supervisory reporting timelines and remove obsolete instructions.

Governor Das reaffirmed the RBI’s consultative approach in reviewing regulations, aligning them with the evolving financial landscape. The industry has responded positively to these initiatives, with leaders like George Alexander Muthoot from Muthoot Finance commending the RBI’s commitment to reducing compliance burdens.

During the announcement, Governor Das also highlighted positive indicators of capital and asset quality in scheduled commercial banks (SCBs) and noted the alignment of non-banking financial companies (NBFCs) with banking system standards.

Additionally, the RBI has announced plans to conduct a comprehensive review of the liquidity coverage ratio (LCR) framework, considering recent global trends where patrons swiftly withdrew deposits due to the availability of instant digital payment options.

The RBI’s efforts aim to strengthen governance, simplify regulations, and ensure financial stability, benefiting all stakeholders in India’s financial sector. Governor Das reiterated the importance of prudent governance and regulatory compliance to safeguard public funds and sustain the sector’s health.