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Informist, Friday, Jan. 9, 2026

 

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--RBI Malhotra: Digitalisation reshaping nature, scale of fincl system risk 
--CONTEXT: RBI Governor Malhotra in speech at College of Supervisors, Mumbai 
--RBI Malhotra:Need agility in regulatory steps to curb digitalisation risk 
--RBI Malhotra: Stability key for regulated entities' long term success 
--RBI Malhotra: Endeavour must be to make supervision real-time, not periodic 
--RBI Malhotra: Sans guardrails, digital channels can cause weak disclosures 
--RBI Malhotra: Sans guardrails, digital channels can cause opaque pricing 
--RBI Malhotra:Supervisors, regulators must give timely input, clarification 
--RBI Malhotra: Regulation, supervision must remain risk-based, tech-neutral

 

NEW DELHI – The Reserve Bank of India should endeavour to make supervision real-time and not periodic, Governor Sanjay Malhotra said Friday. Supervision of regulated entities should also be more off-site than on-site, Malhotra said. 

 

"Increasingly, this will also mean using SupTech and AI-enabled tools more deeply, while retaining judgment and accountability, firmly with supervisors," Malhotra said at the third Annual Global Conference of the College of Supervisors in Mumbai. "It should be our endeavour to make better and effective use of data."

 

Malhotra said that the fundamental architecture of regulation and supervision remains the same even in the digital era--one that follows the principle of risk sensitivity. "Regulated entities still have their stakeholders' interest topmost in mind. Nonetheless, digitalisation has altered the landscape in many ways," the governor said.

 

Digitalisation is reshaping the nature and scale of financial system risks, Malhotra said. "It is also accelerating the transmission of disruptions and risks underscoring the need for agility in regulatory and supervisory response."

 

In the digital age, technology must embed compliance and not bypass it, Malhotra said.  Accountability, too, must remain human and should not be diluted by automation, the governor added.

 

Malhotra said the objectives and purposes of the regulator and the regulated are the same--to ensure long-term growth, advancement, stability, integrity, and credibility of the financial system. For regulated entities to succeed in the long term, stability is essential, he said.

 

Malhotra said protecting customers' interest has to become the cornerstone of a sustainable and resilient financial system. Without guardrails, digital channels can lead to opaque pricing, weak disclosures, and inappropriate recovery practices, the governor said. "Our aim should be to ensure that digitalisation and innovations are aligned with fair outcomes for consumers."

 

Regulators and regulated entities need to collaboate to protect customers from rising digital frauds, Malhotra said. While banks and other regulated entities individually should continue to improve their tools, techniques and processes in preventing and tackling digital frauds, this is an area where we need to collaborate with each other to build analytics and tools to detect mule accounts and suspicious transactions timely and pre-emptively."
 

Malhotra also called for timely inputs and clarifications by supervisors and regulators. "Supervision should not only enforce existing regulations, but also help refine them by flagging regulatory gaps and inconsistencies observed during supervisory engagements," the governor said.  End

 

Reported by Shubham Rana

Edited by Akul Nishant Akhoury

 

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