Sanjay Malhotra, Governor, Reserve Bank of India (RBI), on Friday at the third annual global conference of the College of Supervisors in Mumbai, said that digitalisation is transforming the financial system, demanding agility and collaboration in regulation and supervision. He stated that the regulators and regulated entities are partners in resilience, not adversaries, with shared responsibility for stability, integrity, and growth.
Beyond ‘Tick-Box’ Compliance: A Partnership Approach to Regulation
Malhotra emphasised five key messages, including customer-centricity, the cornerstone of financial innovation. While digitalisation enhances inclusion and convenience, it also heightens risks of fraud, opaque pricing, and weak disclosures. RBI Governor called for collective efforts to build analytics that detect mule accounts and suspicious transactions pre-emptively. He further stressed that systemic resilience must be built through collaboration. The Governor pointed out that the “Regulation works best when banks view supervisors as allies rather than inspectors, particularly in India where banks drive financial intermediation and inclusive growth.”
The governor mentioned supervisory action and enforcement should be corrective rather than punitive. “Enforcement should be the last resort, intended to signal standards and encourage self-correction, while dialogue, training, and guidance remain the preferred tools,” he added.
Leveraging SupTech: Real-Time Monitoring via DAKSH and CIMS
“Effective use of data is critical,” said Governor Malhotra, highlighting platforms such as CIMS and DAKSH that have strengthened supervisory capabilities, and the supervisory data quality index (sDQI) has improved reporting standards. The governor urged deeper adoption of SupTech and AI-enabled tools to enable near real-time monitoring, early risk detection, and evidence-based regulation.
Finally, the governor talked about the importance of capacity building. Regulators, supervisors, and institutions must continuously upgrade skills and imbibe the spirit of regulation beyond tick-box compliance. He stressed that regulation must remain risk-based, proportionate, and technology-neutral. Technology should embed compliance rather than bypass it, and accountability must remain firmly human even as automation expands. He urged stakeholders to adapt supervision to the digital age with collective effort, ensuring stability, innovation, and customer trust.