INFRASTRUCTURE
RBI setting up a robust data analytics ecosystem to strengthen supervision
- IBJ Bureau
- Nov 28, 2024
The RBI is working towards creating a robust data analytics ecosystem to support its supervisory functions, ensuring that the approach remains forward-looking and agile in a rapidly changing world, the central bank’s Deputy Governor Swaminathan J has said.
Addressing a high-level policy conference of central banks from the Global South in Mumbai, Mr Swaminathan said that the supervision of banks and financial institutions was a relatively recent development – dating back around 50 years.
However, the concept of overseeing banks is embedded in the very foundations of central banking, he added.
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, Mr 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.
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, he added.
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