Adapting Supervision to the Digital Age

In a speech delivered at the Global Conference of the College of Supervisors in Mumbai last week, Sanjay Malhotra, Governor of the Reserve Bank of India (RBI), argued that the pace and scale of digitalization are reshaping both the opportunities and the risks of modern finance, and that supervision must adapt without losing sight of first principles.

Malhotra framed resilience as a shared responsibility. He said the RBI views its relationship with regulated firms as “collaborative and not adversarial,” stressing that “the regulators and the regulated are [on] the same team” rather than “opposite camps.” He urged firms to see supervisors “not as fault-finding inspectors, but as partners in resilience.”

Malhotra also addressed the role of enforcement. Penalties and restrictions should be understood as “measures of last resort,” he said, within a continuum that begins with “training and capacity building” and runs through dialogue, guidance, and off-site and on-site supervision. Enforcement actions taken by the RBI, he explained, are “generally not punitive.” Rather, the intent of enforcement is largely to send corrective signals.

On data and technology, Malhotra called for more effective use of analytics and supervisory dashboards to support continuous monitoring and earlier risk detection. The goal, he said, is to make supervision more “off-site than on-site and as near real-time and not periodic.” This can be done, in part, by using SupTech and AI-powered tools more deeply, Malhotra said. However, he stressed that supervisors must retain judgment and accountability while doing so.