Under attack for not being able to prevent scams in the banking sector, the RBI on Friday reorganised its supervisory and regulatory functions into two departments to deal more effectively with potential systemic risk. The central bank had separate departments for supervisory function as well as regulatory function which have been integrated into two unified departments.
The development follows the RBI’s central board decision to create separate supervisory and regulatory cadre.
The Indian banking sector has witnessed a series of scams, including about Rs 14,000 crore fraud in Punjab National Bank and the recent PMC Bank crisis that affected lakhs of depositors. Besides, several large NBFCs have failed on their commitments to service their debt.
“The Reserve Bank of India has today (Friday) reorganised its regulatory and supervisory departments,” the RBI said in a statement.
“...It has been decided to integrate the supervision functions into a unified Department of Supervision, and regulatory functions into a unified Department of Regulation with effect from November 1, 2019,” the central bank said.