Regulators must collaborate to minimise 'harmful overlaps': RBI Dy Guv Swaminathan

Regulators should collaborate to minimise 'harmful overlaps' in an interconnected business environment and close regulatory gaps without impeding innovations, RBI Deputy Governor Swaminathan J has said.

Speaking at the Gatekeepers of Governance Summit last week, he said modern business is not tidy and a listed company can be part of a conglomerate with banks, NBFCs, insurers, brokers, payment firms, tech subsidiaries, overseas arms, and associates.

The regulatory map includes company law, securities regulation and listing rules, sectoral regulators for banking, insurance, pension, competition law, insolvency, accounting and audit oversight, market conduct rules, data and cyber requirements, and multiple enforcement agencies.


Besides, Swaminathan said there are international obligations, exchanges, depositories, SROs (self-regulatory organisations), and state-level authorities.

"In such a world, some overlap is inevitable. That is not a bug. Overlaps can also act as layers of a safety net, ensuring that if one control misses an issue, another may catch it," he said.

The real problem may arise from conflicting rules, duplicated compliance, and uncoordinated enforcement, which is avoidable, the Deputy Governor said.

At the same time, new activities, new technologies, and new business models can fall between the cracks, he added.

"So yes, both gaps and overlaps exist. The task for regulators is to work together, minimising harmful overlaps and closing material gaps, without impeding innovation," he said.

Swaminathan emphasised regulators must balance entity and activity-based regulation, scale requirements to risk and complexity, and strive towards outcome-based regulation, calibrated to market maturity.