The Reserve Bank of India (RBI)’s priority lies with maintaining the stability and integrity of the financial system, the deputy governor, Swaminathan J, said on Friday in an event organised by CNBC-TV18.
The official said that the strict actions taken by the central bank against some ‘outliers’ are not meant to disrupt business operations, reported Business Standard. “.stringent actions have been taken only in a handful of cases. That too, the most outlier in each category has been called out for such punitive actions so that it has a demonstrative effect on the rest of the industry,” Swaminathan explained.
The speech was uploaded by the RBI on its website on Monday. Regarding the criticism faced by the central bank due to its latest actions against banks and shadow banks, the deputy governor said that the banking regulator takes its decisions to safeguard the depositors and customers.
Notably, the RBI recently levied restrictions on business and prohibited companies from taking on new customers for failing to comply with the norms, resulting in inconvenience for the common people. These restrictions were laid on several entities like JM Financial, Paytm Payments Bank, IIFL Finance, and HDFC Bank among others.
Regarding the central bank’s attitude towards these stringent measures, the official commented, “I would like to address today is the perception that supervisors are overly eager to impose business restrictions, sometimes being portrayed as trigger-happy. We are sometimes asked by the media who is next? Implying that supervisory actions are routine in nature.”
Swaminathan added that these decisions are never taken lightly and the RBI brings in such strict measures only after careful consideration of onsite and offsite data. He further said that RBI oversees more than 150 banks, over 9,000 NBFCs and nearly 1,500 UCBs, and has undertaken such action against only a select few.
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