Sanjay Malhotra, Governor, Reserve Bank of India has noted in a speech that Indian banks today are far more mature than they were a decade ago. The credit and deposits have expanded to almost 3 times. Capital buffers have strengthened too - the CRAR rose from 13.5 per cent as on 31st March, 2015 to 17.5 per cent as on 31st March, 2025 with CET-1 increasing from 10.43 per cent to 14.73 per cent during the same period. Asset quality has also improved. GNPA and NNPA have reduced to 2.3 per cent and 0.5 per cent in March 2025 after rising to highs of 11.2 per cent and 5.96 per cent respectively in March 2018. Profitability of banks has enhanced significantly. Between FYs 2017-18 and 2024-25, Return on Assets increased from -0.24 per cent to 1.37 per cent, and Return on Equity jumped from -2 per cent to 14 per cent. Regulation cannot ignore this performance, these changed realities.

Malhotra also highlighted recent regulatory measures which have been built on the bedrock of a banking system that has been systematically fortified over the last decade, with financial stability remaining the unwavering cornerstone of our policy architecture. All the changes are incremental in nature. Moreover, no regulatory measure can be understood in isolation. Each measure has to be seen in the continuum of regulatory evolution and not in isolation. These proposals must be read against the broader regulatory scaffolding, which mitigates the risks. Together, the regulations create a multi-layered defence, to keep systemic risk in check.

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