The recent activities of the banking regulator, the RBI, have surprised the world with strict policies and advanced monitoring of the country’s financial ecosystem. What happened later? India’s financial landscape sets a bar for high standards of accountability and stability in the financial markets. RBI has tightened its oversight across banking, non-banking financial companies (NBFCs), and even fintech sectors, enforcing strict compliance to safeguard the financial system.
One pivotal move highlighting the RBI’s stringent stance is its push towards bank accountability. The RBI has enforced several Prompt Corrective Action (PCA) frameworks on banks facing capital adequacy, asset quality, or profitability issues. According to the Economics Times data, between 2017 and 2018, approximately 11 banks were placed under PCA, including some prominent banks like Allahabad Bank, United Bank of India, Bank of India, Bank of Maharashtra, Central Bank of India, Corporation Bank, Dena Bank, IDBI Bank, Indian Overseas Bank and more. Later, their names were removed from the PCA list when their NPA fell below 6%.
Moreover, the central bank also tightened its grip on the NBFCs by introducing “Scale-Based Regulation” for NBFCs in October 2021, which became effective in 2022 for setting capital requirements, classification norms, and tighter asset quality checks. Because of this, many NBFCs were put under the strict scrutiny of regulators. According to the Business Standard, 9,500 NBFCs registered in India now follow enhanced regulatory norms, with stricter oversight on large entities to mitigate systemic risk.
Guarding The Trust
RBI’s crackdown on unauthorised digital lending apps is evidence of its proactive stance in protecting consumers from predatory practices. The central bank mandated lending platforms to disclose transparent interest rates and prohibited recovery agents from using unfair practices. According to RBI’s estimates, the unregulated lending sector impacts millions of Indians, and the central bank’s guidelines ensure greater transparency and borrower protection.
Further, The RBI’s approach toward the digital payment sector is also marked by a meticulous focus on security and transparency. For instance, it enforced Payment Aggregator and Payment Gateway guidelines, mandating that entities handling digital payments meet specific capital requirements and adhere to data localisation norms. RBI’s regulatory measures ensure that this growth remains secure, protecting the interests of digital payment usersThis rigor has instilled confidence in India’s financial ecosystem, creating a structured approach that fosters innovation while prioritizing stability and consumer protection. Its vigilant oversight continues to earn it the title of India’s “Iron Watchdog.
