RBI Deputy Governor Calls for Tighter Regulatory Oversight of Financial Institutions

MK Jain, the Deputy Governor of the Reserve Bank of India (RBI), has called for tighter regulatory oversight of financial institutions, emphasizing the need for a thorough examination of their business models. In a conference speech, Jain pinpointed corporate governance as the main concern for supervisors and stressed the importance of assessing banks’ alignment with risk appetite by closely analysing their business models.

Jain underscored the significance of evaluating multiple factors, such as business growth projections, sustainability of earnings, diversification, provisioning cover, and pricing mechanisms. He urged supervisors to adopt a structured approach, including a formal escalation matrix, to determine appropriate levels of intervention and corresponding actions.