RBI Guv Malhotra, ET BFSI
The Reserve Bank of India (RBI) Governor Sanjay Malhotra has cautioned policymakers in opposition to extreme regulatory measures that would hinder professional investments and enterprise actions. Talking on the Personal Sector Collaborator Discussion board 2025 in Mumbai, he asserted a balanced and risk-based strategy to Anti-Cash Laundering (AML) and Counter-Financing of Terrorism (CFT) laws to keep away from unintended penalties on financial inclusion and financial development.
“Whereas we proceed to maintain our monetary programs secure from money laundering and terrorist financing, policymakers should be sure that our measures usually are not overzealous and don’t stifle professional actions and investments,” Malhotra mentioned on Wednesday. He mentioned that broad and blunt regulatory instruments typically create pointless compliance burdens on financial institutions and companies, inadvertently affecting sincere entities. As an alternative, he advocated for focused, data-driven laws that reduce disruption whereas successfully tackling illicit monetary flows.
Safety and Progress
Malhotra spoke on the significance of public-private cooperation in safeguarding the integrity of the monetary system. He appreciated the efforts of regulators, monetary establishments, and companies in strengthening India’s AML/CFT framework, which just lately earned the nation a prime rating within the Financial Action Task Force (FATF) mutual analysis. Nonetheless, he warned about complacency not being an choice as cash laundering methods proceed to evolve with developments in know-how.
“A risk-based strategy is essential in making certain monetary laws serve their supposed goal with out imposing undue burdens,” he mentioned, urging monetary establishments to refine their danger evaluation fashions utilizing AI, blockchain, and machine studying.
Know-how as an enabler, not a hindrance
The RBI governor additionally burdened the necessity to harness know-how to enhance compliance processes. “We should repeatedly improve our danger evaluation fashions, knowledge high quality, and technological capabilities to attenuate false positives and negatives in compliance screenings,” he mentioned. He identified that whereas AI and machine studying can considerably enhance fraud detection, regulatory frameworks should evolve in tandem to make sure seamless implementation with out creating bottlenecks for companies.
Malhotra additionally introduced gentle to India’s progress in digital KYC (Know Your Buyer) and centralised KYC (CKYC) frameworks, which have streamlined compliance for each companies and prospects. Nonetheless, he emphasised that there’s scope for additional enhancements, notably in minimising redundant KYC processes for people coping with a number of monetary establishments.
