Synopsis: RBI Deputy Governor Shri Swaminathan J said strong governance intent can eliminate regulatory gaps and overlaps, stressing that true governance goes beyond paperwork. Speaking at the Gatekeepers of Governance Summit in Mumbai, he outlined five core practices boards and institutions must adopt to ensure resilience, accountability, and effective oversight.
Strong Governance Intent Can Eliminate Regulatory Gaps: RBI Deputy Governor
Addressing the 10th Gatekeepers of Governance Summit in Mumbai, Shri Swaminathan J, Deputy Governor of the Reserve Bank of India, said that regulatory gaps and overlaps often arise not from lack of rules, but from weak governance intent. When governance is practiced in spirit rather than form, overlaps simplify and gaps naturally close, he observed.
Welcoming industry leaders and regulators including IRDAI, PFRDA and SEBI representatives, the Deputy Governor said platforms like the summit help stakeholders better understand each other’s perspectives amid increasing complexity in regulation and supervision.
Regulatory Gaps Exist — But Intent Matters More
Shri Swaminathan acknowledged that regulatory gaps and overlaps do exist, both from the perspective of organisations and regulators. However, he cautioned against superficial fixes such as redrawing organisation charts or updating committee structures without addressing root causes.
“As business models, technology, and vendor chains evolve faster than organisational diagrams, overlaps and blind spots inevitably emerge. The real issue is intent,” he said, adding that weak intent leads to excessive procedures while missing real risks.
Five Governance Practices That Truly Matter
With this lens, the RBI Deputy Governor highlighted five critical governance practices that can meaningfully reduce regulatory gaps and overlaps:
- Boards must own outcomes, not paperwork
- Independence should be in substance, not just form
- Look through the group, not just individual entities
- Protect and empower control and assurance functions
- Conduct governance gap analysis with real remediation
Boards Must Own Outcomes
He stressed that boards should focus on outcomes rather than procedural compliance. Directors must actively oversee risk appetite, culture, and ethics, and demand independent assurance from risk, compliance, and internal audit functions.
“Boards must own outcomes — not just sign off on paperwork,” he said, adding that identifying root causes and ensuring closure of issues is a core board responsibility.
True Independence Enables Challenge
Independence, he noted, is not a label but the ability to challenge management assumptions. Citing an RBI survey, he revealed that many boards tend to seek consensus, with some directors hesitant to express dissent.
The role of the Chair, he said, is critical in drawing out diverse views and ensuring that challenge remains safe and constructive.
Group-Wide Risk Oversight Is Essential
In large conglomerates, risks often cut across legal entities. Boards must adopt a group-wide perspective, ring-fence critical entities, and enforce robust related-party transaction policies to prevent local issues from escalating into systemic crises.
Three Lines of Defence Must Be Real
Shri Swaminathan underscored that the three lines of defence — business units, risk and compliance, and internal audit — must function independently and effectively.
Heads of assurance functions should have direct access to the board, adequate resources, and independence in appointment and removal. Weak assurance, he warned, reflects board-level failure rather than staffing issues.
Governance Gap Analysis Is No Longer Optional
With markets evolving faster than regulations, periodic governance gap analysis is critical. Such reviews help institutions benchmark themselves against best practices, identify blind spots, and strengthen compliance and risk frameworks.
Conclusion
The Deputy Governor concluded that governance effectiveness depends less on rulebooks and more on intent, culture, and accountability. Where governance intent is strong, regulatory overlaps fade and gaps close naturally — reinforcing resilience and trust across the financial system.
📌 Key Takeaway
Strong governance intent — backed by empowered boards, genuine independence, group-wide risk oversight, and robust assurance functions — is the most effective way to eliminate regulatory gaps and overlaps, according to RBI Deputy Governor Shri Swaminathan J.
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