The Reserve Bank of India (RBI) has strengthened its supervision and enforcement team by over 800 people since the pandemic, based on recruitment trends, resulting in increased inspections and penal actions against regulated entities.
According to RBI’s December 2023 annual report, its total staff strength rose to 13,490, up around 10% from 12,276 in 2020. Most of these additions are believed to be in the Department of Banking Supervision and Enforcement.
Generally, the share of the supervision department in total recruitment is the highest. Broadly, out of total recruitment every year, 70-75% of people are part of the supervision and enforcement department. The rest of the recruits are divided among other departments.a retired senior RBI official said.
The RBI has net-added 1,214 staff across departments since 2020, which means over 800 have been added to the supervisory and enforcement team.With rapid digitalisation and banks partnering with fintechs and technology companies, the RBI also added technology experts to its supervision team.
Needless to say, the majority of them are tech engineers.the official added.
The RBI has also expanded its offices in Mumbai, acquiring floors in the World Trade Centre, Mittal Chambers, and Maker Towers in South Mumbai, close to its Mint Road headquarters.
RBI staff strength
RBI hires techies and engineers
Banks and NBFCs are strengthening their digital capabilities, from onboarding to servicing customers. Whether in payments or lending, many products and services are now live on banks’ digital apps. Given the growing need to supervise the technological activities of financial institutions, central banks globally have been adding tech experts and engineers who can unravel the complexities of transactions and entity relationships. The RBI has also hired several consultants and has resorted to lateral hiring to acquire top talent, particularly in its supervision division.
RBI actions
Over the last four years, as it increased its supervisory staff, the RBI has also ramped up inspections. From imposing moratoriums to taking over bank boards to maintain financial stability, the RBI has taken a range of actions against regulated entities.
Some of the entities that faced RBI action in the last 4-5 years include HDFC Bank, Yes Bank, RBL Bank, PMC Bank, and Kotak Mahindra Bank, along with NBFCs, dozens of cooperative banks, and fintech firms, with notable cases involving Paytm and Navi.
In 2022-23, the RBI imposed penalties amounting to Rs 86.11 crore on 281 regulated entities. In 2021-22, it inspected 211 entities and levied fines of Rs 40.39 crore. In 2020-21, it inspected 189 entities, imposing penalties of Rs 65 crore.
Year-wise inspections and penalties
RBI changes penalty patterns
Many regulated entities, including scheduled banks, NBFCs, fintech firms, and cooperative banks, have faced significant penalties over the last few years.
Earlier, the central bank primarily relied on monetary penalties. However, it has now introduced measures that directly impact the business of the regulated entity.
Just a few crores in penalties didn’t make a difference for banks, as many of them earn profits in thousands of crores. Hence, we had to modify our penalties and hit them where it hurts more.the official quoted above explained.
“Loss of business forced bankers, shareholders, and especially board members to pay more attention to the issues,” the official added.For instance, the RBI had barred HDFC Bank from onboarding new credit card customers due to lapses. Similarly, it disallowed Kotak Mahindra Bank and Bank of Baroda from onboarding new customers online as part of its actions.
