RBI
Deputy Governor M Rajeshwar Rao emphasized during a special address at the India Investment Summit and Awards organized by Mint in Mumbai on March 30 that the Reserve Bank of India (RBI) will maintain constant vigilance to mitigate risks. He warned that unchecked credit expansion could harm the stability of financial institutions and, if widespread, could lead to systemic issues. Rao highlighted the RBI’s commitment as a regulator to fostering a strong and resilient financial intermediation system with appropriate oversight.
Rao underscored the RBI’s responsibility in nurturing a robust financial intermediation system via suitable regulatory and supervisory structures. He recognized the substantial advantages brought by technological progress and innovations to the financial domain, encompassing broader accessibility and enriched product portfolios. Nevertheless, Rao voiced concerns regarding the hurdles presented by emerging players in financial services, notably FinTech firms, whose presence could substantially reshape market dynamics.
Rao provided further details on steps taken to mitigate risks, including directives for digital lending that mandate thorough due diligence in loan decisions, even when loans are obtained through lending service providers (LSPs).
He emphasized the importance of banks and NBFCs maintaining proper underwriting standards and accurate risk assessment, despite their increasing reliance on fintech partners. Wrapping up his remarks, Rao emphasized the enduring importance of core principles such as good governance, robust risk management, effective compliance, customer protection, and responsible business conduct in the evolving financial landscape. He advocated for a strong organizational culture that prioritizes these principles, ensuring the long-term stability and integrity of the financial system.
