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MUMBAI: The Reserve Bank of India (RBI) governor Sanjay Malhotra on Friday said that Indian banks are far more mature today than they were a decade ago and the central bank does not aim to micromanage them. Speaking in the context of the wide range of reforms announced during the October review of the monetary policy, Malhotra said, “No regulator can, or should, substitute for boardroom judgment, especially in a diverse country such as ours.” “Each case, each loan, each deposit, each transaction is different, with varying risks and opportunities. We need to allow the regulated entities to take decisions based on merits of each case, rather than prescribing a one size fits all rule. This will enable regulated entities to experiment and innovate, learn and improve,” he added. Last month, the RBI had announced 22 reforms including allowing banks to finance acquisitions, increasing limits on loans against shares, and laying out draft norms for transitioning to the expected credit loss (ECL) framework for loan loss provisioning. Malhotra was delivering the keynote address at the SBI's Banking and Economics Conclave 2025 here. He cited the example of SBI which has transformed from being in loss in 2018 to now becoming a $ 100 billion company due to the regulatory and structural reforms implemented over the past decade. “Removal of the restrictions (on financing acquisitions) by the banks will benefit the real economy and as the draft has guardrails like limits on bank funding which is 70 per cent of the deal value, aggregate exposure limits relative to Tier-1 capital of the bank, eligibility criteria which will ensure safety while allowing banks and their stakeholders to reap benefit of additional business.” He also said that recent regulatory measures should be seen in the context of better financial health of banks, like higher capital adequacy ratio, asset quality and improved profitability. Meanwhile, speaking at the same conference T Rabi Sankar, deputy governor, RBI said that frauds per number of transactions, as detected by banks, have been rising since July of the current year after a steady decline since the beginning of the year. He said that the increase could be either cyclical or seasonal. He said that the digital infrastructure is being deployed by the regulator like the mule hunter which is designed to track down conduit accounts to flush out money received through frauds.
