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Informist, Monday, Jan. 12, 2026

NEW DELHI – Reserve Bank of India Deputy Governor Swaminathan J. highlighted various risks supervised entities and supervisors face in a digital age and called for more prudence and vigilance while dealing with the same. "...today, a bank can look perfectly healthy on paper and still be one incident away from severe disruption," Swaminathan said in a speech Friday at the College of Supervisors, RBI, Mumbai. 

"The reason is that the centre of gravity is shifting from the "branch and product" to the "pipes and code". In other words, stability now depends as much on operational resilience, data integrity, and third-party dependencies as much it does on capital and liquidity."

He detailed how the risk landscape has changed in the digital age owing to speed, concentration, interdependence and the growing role of artificial intelligence, adding that there are conduct risks in a digital wrapper and expanded threat surface. "Even when a bank's internal controls are strong, a weakness at a vendor, a partner, or a common technology component can spill over. Resilience and recovery must be treated as core capabilities," he said.

The deputy governor called for technology-neutral, risk-based, calibrated and proportional supervision, but without lowering expectations for basic controls, such as cybersecurity hygiene, data protection, and governance. He also batted for a clear accountability by supervised entities and forward-looking supervision. "Supervision must shift from periodic snapshots to continuous awareness. It also needs to move beyond a single institution and take a sharper view of its ecosystem," Swaminathan said.

Calling for operational resilience and cyber readiness, Swaminathan said there should be deeper engagement with boards and senior management on cyber governance, crisis playbooks, recovery capability, and learning from near misses. Supervisors should also focus on the ecosystem around the supervised entity as critical functions may be hosted by cloud providers, technology vendors, payment intermediaries, outsourced service centres, fintech partners, and data service providers, he said.

On the increased use of artificial intelligence in decision making, Swaminathan said, "From a supervisory standpoint, the question is not whether a bank uses AI. The question is whether it can demonstrate governance and accountability around its use." Further, at a time when banking has become always-on, he urged on-site and off-site teams to work more closely together, to pick up early signals and for faster follow-up.

"...compliance cannot be treated as a quarter-end activity. With faster cycles, banks will need stronger operational discipline and data governance throughout the year," he said. "When an anomaly is flagged, the ability to explain it and fix it quickly becomes a marker of control maturity."

Swaminathan further said that regulated entity cannot outsource responsibility and third-party management must be treated as risk management. "In the digital era, supervision must remain prudent but also become more vigilant, more ecosystem-aware, and more outcome-focused," he said. "The intent is not to impede innovation. Instead, it is to ensure that innovation rests on trust, resilience, and customer fairness."  End

Reported by Pratiksha

Edited by Akul Nishant Akhoury

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