However, the concept of overseeing banks is embedded in the very foundations of central banking.
From the early days, central banks have fulfilled their role as the lender of last resort, ensuring that financial institutions remained solvent and protected against systemic crises, Swaminathan said.
The senior RBI official further said that to build financial resilience, supervision must be proactive, continuous, forward-looking and risk-focused.
An effective banking supervision system requires the supervisor to maintain a continuous, forward-looking assessment of the risk profiles of individual banks, aligned with their systemic significance.
“We are dedicated to establishing a global model of risk-focused supervision, one that emphasises strong risk discovery and compliance culture, and builds a ‘through-the-cycle’ risk assessment framework. “Additionally, we are working towards creating a robust data analytics ecosystem to support our supervisory functions, ensuring that our approach remains forward-looking and agile in a rapidly changing world,” the Deputy Governor said. He further said that to further strengthen supervisory capacity, RBI is also investing in initiatives such as the College of Supervisors, which seeks to enhance the skills and expertise of our supervisory staff.
In addition to building capacity, the central bank is increasingly focusing its efforts on improving the risk and compliance culture within supervised entities, ensuring that these institutions not only meet regulatory requirements but also foster a proactive, robust approach to managing risk and compliance at all levels.