RBI Swaminathan says regulators must assess entities based on their activity
This story was originally published at 14:17 IST on 7 November 2025
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--RBI Swaminathan: Regulators must balance firms on activity-based regulation
--CONTEXT: RBI Deputy Governor Swaminathan's comments at an event in Mumbai
MUMBAI – Sharing three principles to minimise harmful regulatory overlaps and to bridge material gaps, Reserve Bank of India Deputy Governor Swaminathan Janakiraman said regulatory bodies must assess entities based on their activities. "...if two activities create the same risk, they should face the same rules, regardless of the level of the provider (entities)," he said at an event here Friday.
The second principle is that regulators should apply requirements based on risk and complexity, he said. In other words, a small simple firm should not bear the same burden as a large interconnected group. Systemically important players should meet higher capital, liberty, control, and disclosure standards. Proportionality keeps oversight critical and optimum, he remarked. Thirdly, authorities must strive towards outcome-based regulation, Swaminathan said.
Swaminathan also laid out some practices to internalise good corporate governance in everyday decisions. For instance, boards of companies must weigh outcomes, not paperwork. Secondly, independence should be in substance, he said. Independent directors should be able to challenge strategy, controls, financials, and risk.
"Internal audits test the system independently...the head of internal audit must have access to the board under any business line that can create material risks. They should have adequate budgets and full access to information," Swaminathan said. End
Reported by Shakshi Jain and Anjana Therese Antony
Edited by Ashish Shirke
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