Restrictions, penalties last resort: RBI guv

The relation between a regulator and its regulated entities is collaborative and not adversarial, with the common objective of maintaining the stability and credibility of the financial system.

- MANOJIT SAHA

However, the action on regulated entities like penalties and business restrictions are the last resort, Reserve Bank of India’s (RBI's) governor Sanjay Malhotra said on Friday.

At the same time, the governor said that regulated entities need to better understand regulatory expectations and requirements, particularly in the areas where models, partners, data, and digital delivery create new forms of risk.

“They need to imbibe the essence of regulation and follow the spirit of it and not merely follow a tick-box based compliance culture. Our endeavour, rather, should be to develop common understanding which can reduce frictions and improve outcomes,” Malhotra said at the Third Annual Global Conference of the College of Supervisors in the city.