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Informist, Wednesday, Nov. 27, 2024

 

MUMBAI – The Reserve Bank of India aims to engage with the central banks of the Global South and is dedicated to establishing a global model of risk-focused supervision, RBI Deputy Governor Swaminathan J. said. "We are dedicated to establishing a global model of risk-focused supervision, one that emphasises strong risk discovery and compliance culture, and builds a 'through-the-cycle' risk assessment framework," Swaminathan said speaking at a conference of central banks from the Global South in Mumbai on Nov. 22.

 

The deputy governor also said that the RBI is working towards creating a data analytics ecosystem to support these supervisory functions. While the task of supervision may be challenging, it is essential to ensure the stability and resilience of the financial system, he said.

 

The task of supervision has become more dynamic and critical than ever before. Technological advancements have brought incredible efficiencies, but also significant vulnerabilities such as cyber-security threats and risks stemming from third-party dependencies, he said. Climate change, which was once considered a distant concern, now poses an immediate threat to institutions and economies along with other issues such as geopolitical uncertainties, volatile markets and shifting macroeconomic trends, Swaminathan said.

 

"Supervision, therefore, needs to evolve with the times and can no longer be just about enforcing compliance. Instead, it needs to anticipate risks, respond swiftly to both foreseeable and unforeseen risks and foster resilience in the financial system," he said.

 

The role of supervisors is to identify, evaluate and address risks from individual institutions and across the banking system, he said. "(Supervisors need to have a) well-defined framework for early intervention and clear contingency plans to ensure that non-viable banks can be resolved in an orderly and efficient manner. For that, supervisors must possess the resolve to act swiftly and decisively when necessary," he said.  End

 

Reported by Kshipra Petkar

Edited by Saji George Titus

 

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