含羞草社区

含羞草社区 banking regulator has intensified oversight and startled the financial industry, but legal experts say it is responsible policing and shields the sector from trouble. Indrajit Basu reports

OThe Indian financial sector has faced increased scrutiny in recent months with the Reserve Bank of India (RBI) ramping up enforcement of regulations to improve governance. The moves come amid allegations of non-compliance, security breaches and cyber-attacks at banks and other financial companies.

While the regulator and central bank justifies its vigilance as part of continuing reforms, legal experts caution that the heightened oversight could elevate capital costs and slow growth, despite the long-term advantages.

They believe that, while the moves are intended to improve the stability and integrity of the financial system, the policies also pose challenges for financial sector players attempting to maintain growth and client trust.

“The RBI’s recent actions deal with multi-faceted issues with far-reaching implications in the Indian financial ecosystem,” says Abir Lal Dey, a Mumbai-based banking partner at Saraf and Partners.

“On one hand, such measures are designed to bolster the stability, security and integrity of the financial system, such as comprehensive review of income recognition, asset classification and provisioning norms to harmonise instructions across all regulated entities, as well as changes to the know-your-customer [KYC] norms so as to move towards a faceless KYC system,” he says.