Recent Regulatory Actions Not Meant To Punish, Says RBI Governor

"Our approach has been that wherever there has been a deficiency, we first deal with these issues bilaterally," Das explained. The institution first provides a roadmap. Supervisory restrictions are imposed because the institution was unable to course correct, he added.

Recent times have seen an immense qualitative improvement in central bank supervision by way of onsite and offsite supervision, Das said. "Our supervision is now well developed and now we can keep an eagle's eye on the banking and financial sectors," he added.

The governor said that fintechs continue to receive support from the central bank. "Still, if you are driving a car, you need to abide by the rules to avoid untoward accidents," Das said.

Das's statement comes after RBI intensified its supervisory efforts to mitigate the lapses in the financial sector.

In April, the RBI ordered Kotak Mahindra Bank Ltd. to halt issuing new credit cards and onboarding customers via online and banking channels due to severe IT management deficiencies. Last year, the RBI instructed Bank of Baroda to stop onboarding customers through its mobile app, citing significant concerns about its customer onboarding process. The RBI lifted this ban in May.

As per the RBI's annual report for the fiscal 2023-24, the central bank had imposed 281 penalties on regulated entities worth Rs 86.1 crore during the year for non-compliance with provisions of certain directions from time to time.

The governor added that financial stability and customer safety remain cornerstones of the RBI's supervision.

Serious fintech entrepreneurs understand what the central bank is doing, Das said. Still, these fintechs are operating in a regulated space and need to stay within that space, the governor remarked.

Over the past few months, the central bank has taken a series of regulatory actions against non-bank lenders for alleged non-compliance with rules. The central bank also received criticism for the lack of disclosures and transparency behind the curbs imposed, with concerns that the moves could dampen investor confidence and hamper the burgeoning ecosystem.