RBI's recent actions reflect increased compliance focus

A SERIES OF actions taken by the Reserve Bank of India over the past six months has left the financial sector puzzled about the heightened aggression of the banking regulator.

- SACHIN KUMAR

From taking industry-related measures such as raising risk weights on unsecured loans to entity-specific steps on Bank of Baroda, Paytm Payment Banks, IIFL and JM Financial, the severity of actions has surprised stakeholders in the financial sector.

These actions are aimed at bringing behavioural changes in the regulated entities and showing the RBI's focus on compliance, say experts.

"The message is clear. If you are not going to behave, then punishment could be severe, including cancellation (of licence). That is the message the regulator is sending. We will not hesitate to close down, even if you are a big entity," R Gandhi, former RBI deputy governor, told FE.These actions reflect the change in the enforcement approach of the regulator, he added.