India Considers Major Overhaul of Banking Regulation

India's financial regulators are contemplating a significant shift in their approach to bank oversight, moving from a traditional compliance checklist to a more in-depth analysis of banks' business models. According to Jin10, insiders have revealed that the Reserve Bank of India (RBI) plans to conduct comprehensive studies of banks' operational methods rather than isolating financial ratios during inspections. The regulatory body is also looking to expand its workforce, with a focus on hiring cybersecurity experts, as digital risks in the banking system have become a primary concern. The reform proposal is still under review, and details may change. This initiative comes as India's banking sector is expanding at an unprecedented pace, putting pressure on regulatory tools designed for simpler times. Past governance failures at institutions like IndusInd Bank and the now-defunct New India Cooperative Bank have highlighted the limitations of traditional, outdated regulatory methods that rely heavily on financial snapshots, potentially overlooking vulnerabilities masked by healthy data.