In an era marked by accelerating technological disruption, climate-related shocks and intricate global financial linkages, risk management has emerged as the linchpin of India’s financial stability. That mandate finds its champions in two RBI Deputy Governors – Mr. M. Rajeshwar Rao and Mr. Swaminathan J. – whose recent interventions signal a paradigm shift toward anticipatory and institution-building regulation.
Strengthening Governance in Non-Banking Channels
Deputy Governor Mr. Swaminathan J. has been at the forefront of systemic resilience in the NBFC and community-banking sector. On March 28, 2025, speaking at a major NBFC industry event, he struck a cautionary note: “Asset-liability mismatches, nature and tenor of the funding sources and concentration risks all need board-level oversight which should be ably supported by robust internal controls.” He warned that weak governance structures magnify vulnerabilities during stress episodes and strongly cautioned that “financial inclusion cannot be used as a pretext for financial exploitation”.
The significance of this directive is stark. Post the IndusInd Bank accounting irregularities, concerns mounted over liquidity control and audit frameworks across smaller lenders and Swaminathan left little ambiguity in his demand for institutional accountability supported by statutory audit follow-through.
Prioritising Cooperative-Banking Resilience
On July 18, 2025 Deputy Governor Mr. Swaminathan addressed directors of Urban Cooperative Banks in Pune. He urged them to “sharpen governance, better understand and manage risks and adopt secure technology”, underscoring that trust of depositors was “non-negotiable.” He emphasized that though these banks are purpose-driven, they remain “licensed to accept public deposits” and must therefore uphold prudential standards.
He lauded the formation of the National Urban Cooperative Finance and Development Corporation (NUCFDC) as a structural backstop: a shared services umbrella enabling smaller banks to access modern tech, compliance tools and liquidity support while preserving local identity. Through this, RBI moved beyond exhortation to active ecosystem-building.
Reinforcing Assurance Functions in Commercial Banks
Earlier in the year, Mr. Swaminathan spoke at a BIS-hosted conference for Heads of Assurance Functions (January 10, 2024), advocating a four-line defence model to preserve financial stability. His framework – from frontline risk ownership to internal and external audit checks – places institutional integrity at the core.
He notably urged banks to adopt a “regulation-plus” mindset, where compliance is not a checkbox exercise but an ethical baseline. He underlined the importance of embedding ICAAP (Internal Capital Adequacy Assessment Process) into strategic decisions, and insisted that breaches of risk thresholds “must be addressed systematically,” not deferred or ignored.
Addressing Emerging Threats: Tech, Climate, Cyber
At the November 22, 2024 Global South-central banks conference in Mumbai, Mr. Swaminathan reframed supervision as a “dynamic discipline in the face of cyber-security, supply shocks, climate-related vulnerabilities and geopolitical uncertainty.” He stated, “Resilience goes a step further: it ensures the system adapts and thrives,” while announcing RBI’s calibrated supervisory architecture, early-intervention protocols and capacity-building via a College of Supervisors.
These structural innovations reflect a shift from reactive regulation to anticipatory measures, designed to detect and pre-empt systemic stress before it materialises.
Reining in Ethics & Empathy in Banking Culture
In his most recent remarks (July 22, 2025), Mr. Swaminathan highlighted a worrying trend of rising customer grievances. At NIBM’s banking conclave, he observed, “Automation has increased, but empathy and personal responsibility have decreased.” He cited examples – senior citizens struggling with ATMs, digital borrowers facing UPI failures – not as mere operational inefficiencies, but as trust deficits eroding public confidence. He urged bankers to balance efficiency with “empathy, curiosity, and integrity”.
Beyond risk controls, this shows that RBI sees softer cultural dimensions – customer-centricity, ethical stewardship – as integral to resilience.
Building Digital-Rupee Infrastructure & Cross-Border Platforms
Deputy Governor Mr. M. Rajeshwar Rao, appointed in July 2023, is steering RBI’s digital infrastructure push. Though less vocal in public forums, he oversees pivotal domains: banking regulation, financial inclusion and digital currency technology.
Under his leadership, the RBI Innovation Hub has accelerated digital rupee development and global interoperability efforts. In June 2024, India joined Project Nexus, linking its fast-payments platforms with those of Malaysia, Thailand, Singapore and the Philippines to enable cross-border retail transfers by 2026. Mr. Rao’s policy vision here is clear: strengthen data architecture, reduce third-party exposure and mitigate underlying tech-driven vulnerabilities.
Market Discipline Through Risk-Weighted Assets (RWA) Calibration
In quiet but firm supervisory action, the RBI under Mr. Rao has prompted banks and NBFCs to recalibrate risk-weighted assets, especially in unsecured digital loans. The objective: head off aggressive credit growth and ensure capital buffers match future stress scenarios. Though not spotlighted, these prudential norms reflect RBI’s shift toward building forward-looking shock absorbers.
What unites these initiatives is intent: to transition Indian finance from episodic crisis response to a continuous state of preparedness, where systems absorb shocks, regenerate trust and innovate responsibly.
Echoing Charles Goodhart’s maxim cited by Swaminathan, “the best a supervisor can hope for is that nothing untoward happens.” The RBI, under the stewardship of its Deputy Governors, seems equally content to be invisible but ever-present in ensuring that nothing untoward, indeed, happens.
As global uncertainties proliferate, institutional depth matters. The silent, persistent efforts of RBI’s leadership in embedding risk culture, governance discipline, and anticipatory oversight are setting the economic foundation for a resilient India.