RBI reorganises supervision & regulatory departments

The organisation rejig is expected to improve financial conglomerates' supervision.

BCCL
The supervision department and the regulatory department will be 'activity based' post the rejig. The supervision department will be graded based on size, complexity of entity.
Reserve Bank of India reorganised its regulatory and supervisory departments as a part of its initiative to have a holistic approach towards supervision and regulation amidst growing complexities and inter connectedness in the financial system.

With a view to having a holistic approach to supervision and regulation of the regulated entities so as to address growing complexities, size and inter-connectedness as also to deal more effectively with potential systemic risk that could arise due to possible supervisory arbitrage and information asymmetry, it has been decided to integrate the supervision function into a unified Department of Supervision and regulatory functions into a unified Department of Regulation with effect from November 01, 2019, according to an RBI said in a release on Friday.

The RBI board had in May 2019 had approved the creation of the separate supervisory and regulatory cadre. “The restructuring of the regulation and supervision function is among a series of steps RBI will take to implement this decision” RBI said.


Currently, supervision is conducted through three separate departments, department of banking supervision, department of non-banking supervision and department of co-operative bank supervision. Similarly, regulation is also carried out by three separate departments.

The restructuring will make supervisory and regulatory process more activity based rather than being segmented purely based on the organizational structure of regulated entities, facilitate more effective consolidated supervision of financial conglomerates among the RBI supervised entities, among others.

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