Growth with Responsibility

In a speech earlier this month, Swaminathan J, Deputy Governor of the Reserve Bank of India, argued that financial institutions must ensure that controls, trust, and resilience keep pace with growth as the financial system becomes more technology-intensive and interconnected.

Swaminathan said the Indian financial system is entering its next phase “from a position of strength,” but warned that growth can weaken controls if firms treat every friction as inefficiency. Independent checks, cooling-off periods, and other safeguards may slow a process while reducing error or fraud. Technology can change how those controls operate, but not the risks they address, and responsibility remains with the regulated entity when activities are outsourced. If firms remove safeguards without understanding their purpose, he said, “process simplification may in fact be control dilution.”

Trust, he argued, is an asset requiring continuous investment even though “it does not appear explicitly on the balance sheet.” Incentive design, use of customer data, and grievance handling all shape that trust. Complaints can be “an important source of risk intelligence,” revealing weaknesses in products, incentives, digital journeys, or third-party arrangements. Weak controls at one institution can also impose a trust cost on the wider financial system.

Swaminathan also argued that resilience must increasingly be measured in organizational reaction time as well as buffers. “One useful measure of governance quality, therefore, is the time it takes for bad news to travel through the institution,” he said.

Swaminathan concluded that growth should be judged not only by its pace or scale, but by the strength of the controls behind it, the fairness of the conduct supporting it, and the trust it sustains. “The opportunities before us are considerable, but so too is the responsibility to ensure that innovation is matched by judgement, growth by sound controls, and ambition with resilience,” he said. “If we can preserve that balance, the next balance sheet will not only be larger; it will also be stronger.”