rajeshwar rao : regulatory insights into 2024 special address by mr rajeshwar rao, deputy governor of the reserve bank of india, at the india investment summit & awards, organised by mint, mumbai, 30 march 2024. * * * good evening, it is indeed a pleasure to be here amidst this distinguished gathering. the theme of the summit,'rise of the indian spring ', is both contextual and inspiring, reflecting not just the rising trajectory and profile of the indian economy, but also the sentiments prevailing within the country and across the world. as a regulator, our endeavour always is to promote a robust and resilient financial intermediation system with an appropriate regulatory and supervisory framework. during my address today, i therefore intend to share some perspectives on how are we building the enabling regulatory frameworks to prepare indian financial system and entities to support the nation's growth aspirations as well as building guardrails for ensuring financial stability. the technological developments and innovations, which we are currently witnessing hold great promise for the financial sector. they have immense potential to increase the reach of financial firms, enhance the range of product offerings and conveniences for customers, expand the ambit of finance to hitherto excluded segments with the added benefit of lower costs for delivering them. at the same time, we need to be alert to the possibilities that the new entrants into the financial services space, including fintech firms, could significantly alter the universe of financial services providers. this could affect the degree of market concentration and competition and may give rise to new challenges. regulatory principles regulations can be thought of as cornerstones for building trust, enabling integrity and ensuring stability in the financial sector. regulations define the boundaries of industry conduct, while ensuring a fine balance between fostering innovation and safeguarding public interest. before i touch upon the specific areas of our potential focus going forward, i would like to outline a few guiding principles that usually guides us in deciding our regulatory approach. while each policy formulation focusses on addressing a specific set of requirements, having its own schema and flavour, policy makers should be guided by three broad guiding principles namely – prudence, proportionality and proactiveness. given the dynamics of the indian financial landscape and the institutional set - up, one more principle relevant for us at the reserve bank is a " harmonised approach to regulations ". prudence in regulations 1 / 7 bis - central bankers'speeches prudence in financial regulations refers to being cautious and sensible in managing

paradigm. as the consumer preferences change, banking and financial services industry would have to reorient their business models, processes and products. to cater to this change, the rbi has started its groundwork on enhanced use of technology in banking such as use cases of artificial intelligence, digital ledgers, and so on. let me also add here that technology brings its own set of challenges in the form of data protection, cyber security, and technology - induced frauds. these are in fact areas which are increasingly engaging the attention of regulators not just in india, but also at a global level. strengthening customer service and conduct you all may have noticed that there has been a renewed focus on strengthening the conduct related aspects of our regulated entities. over the last one year we have issued instructions on the responsibilities of regulated entities employing recovery agents, strengthening of conduct regulations relating to pricing for loan related products, return of loan related security documents, addressing customer grievances related to reporting of credit scoring, among others. the recent announcement for lenders to provide their borrowers a key fact statement ( kfs ), which will be issued shortly, is also an endeavour in this direction. these regulatory initiatives are expected to foster more responsible lending conduct in lending by res. 4 / 7 bis - central bankers'speeches these efforts on regulatory front are being complemented by suitable supervisory examination of the conduct of regulated entities to ensure fair, sound, efficient and transparent delivery of banking products and services. as we further strengthen our approach towards addressing the concerns in framing and enforcing conduct - based regulations, the guiding philosophy would be to set out minimum regulatory expectations, with the option for entities to adopt higher standards depending upon their size, proportionality and customer focus. the regulations should ensure that customers are not misled by false promises and / or do not fall prey to unfair practices. improving governance and compliance & risk management another area of focus is on improving governance in the regulated entities. if one were to choose a single expression that epitomizes banking business, it has to be'risk management '. this arises from multiple factors including bank's fiduciary role in respect of depositors, their critical interaction with real economy and their role in ensuring financial stability. a strong governance framework and a robust risk management system coupled with effective oversight by the board and the senior management provides a greater degree of complementarity to the objectives of the regulator. recognising that governance is the bedrock of a sound banking system, guidelines have