Blitz Bureau
NEW DELHI: The Reserve Bank of India (RBI) has responded to criticism regarding its stringent actions against banks and shadow banks, stating that these measures were intended to protect depositors and customers. The RBI clarified that only a handful of entities have faced business restrictions.
“I would like to address the perception that supervisors are overly eager to impose business restrictions, sometimes being portrayed as trigger-happy” RBI Deputy Governor J Swaminathan said.
In recent years, the regulator has imposed business restrictions and barred entities from onboarding new customers for violating norms and causing customer inconvenience. Some of these entities include HDFC Bank, Paytm Payments Bank, IIFL Finance, and JM Financial, among others.
“We are sometimes asked by the media, ‘Who is next?’—implying that supervisory actions are routine in nature,” Swaminathan said.
“Stringent actions have been taken only in a handful of cases. The most extreme outliers in each category have been subjected to such punitive actions to have a demonstrative effect on the rest of the industry,” he added.
Swaminathan noted that there are over 150 banks, more than 9,000 non-banking financial companies, as well as about 1,500 urban cooperative banks (UCBs) and other entities that the RBI supervises. Stringent actions have been taken only in a few cases.
He emphasised that the decision to impose business restrictions is never taken lightly. Strong supervisory actions are implemented only after careful onsite examinations, offsite data analysis, and extensive engagement with the regulated entities concerned, often over several months.
“Our primary goal is to ensure the stability and integrity of the financial system, not to hinder business operations,” he said.
Citing the example of fintechs, Swaminathan mentioned that many such platforms operate on a business model that involves extending small-value loans to customers, often with poor credit profiles. Unfortunately, this is frequently followed by aggressive recovery tactics, such as invading customers’ privacy by accessing their contacts and personal data.
