“Various regulatory dilemmas have emerged wherein a balanced approach had to be taken. It was necessary to weigh the customer benefits brought in by innovative business models of FinTechs on one side and the emerging business conduct and regulatory concerns on the other,” he said at a media function.

The regulatory objective was to rein in the negative externalities while retaining the salutary effects of innovative digital business models.

The data on private equity flows into the digital lending space after the issuance of these guidelines demonstrates the faith of investors on the Indian digital lending story and the belief that, going forward, digital lending under the regulatory gaze of the RBI will spur the FinTech sector even more, he said.

Structural changes have also been implemented to enhance the agility, flexibility, and specialisation of the RBI’s supervisory structure.

The bank’s supervisory systems have been recalibrated to attune them to the dynamics of the financial sector in a forward looking approach so as to smell possible distresses early.

The frequency and intensity of on-site supervisory engagement is now based on the size as well as the riskiness of the institutions.

These supervisions have also become more intense and frequent. The RBI has also strengthened its engagement with the senior management, Das said.

“We have considerably strengthened supervisory macro and micro data analytics to capture potential and emerging risks. We deep dive into the business models of banks and other lending.”

Das said that another area of close attention for the RBI was the cybersecurity risk.

“Although there are obvious benefits of adoption of IT in banking, the attendant risks need to be effectively addressed. Considering the diversification and complexity levels of our regulated and supervised entities, we have issued differentiated cybersecurity baseline control frameworks for the varied entities,” the RBI governor said.

He also said there has been a remarkable turnaround with NPAs having come down drastically in the Indian banking system which is now well-placed to support India’s growth story in the years ahead.