RBI plans to set up ‘college of supervision’

To ensure that irregularities in the financial sector, which is increasingly becoming complex and interconnected, do not escape the attention of its inspectors, the Reserve Bank of India is planning to set up a ‘college of supervision’.

“Skill imparting is not a one-time affair. They (inspectors) have to be re-skilled from time-to-time because things are evolving, things are changing, becoming more complex. So, more emphasis can be given on improvement of skills.

“...And, therefore, for better training, we are creating a college of supervision. We are also creating within the Department of Supervision and Regulation, an internal research and analysis group,” said Shaktikanta Das, Governor, in an interaction with BusinessLine .

The proposed college will improve the skill set of inspectors so that when they assess risk in regulated entities such as banks, non-banking finance companies, urban co-operative banks and payment system providers they are mindful of the possible dangers lurking.

This move comes in the backdrop of the letter of undertaking scam at Punjab National Bank, the IL&FS group and DHFL defaulting on debt servicing and Punjab and Maharashtra Co-operative Bank being brought to its knees due to a large irregular exposure to a real estate company.

Following the aforementioned developments, the RBI created a unified Department of Supervision and a unified Department of Regulation. Earlier, there were three separate supervision departments (one each for banking, non-banking and co-operative banks) and three separate regulation departments (one each for banking, banking and co-operative banks).

Further, a separate supervisory and regulatory cadre has been established to give more focussed attention to functioning of regulated entities in the context of growing interconnectedness (mutual exposures of financial intermediaries).

Senior regulatory sources said the college will provide inspectors training to improve their onsite inspection skills and off-site surveillance and bring them up to speed with the latest developments, including innovations, frauds, cyber-security risks, in the financial sector.

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