Policy should provide room for innovation growth while ensuring accountability, resilience: RBI Deputy Governor
Reserve Bank of India’s (RBI) Deputy Governor Rohit Jain has emphasized that policy should provide room for innovation to grow while ensuring that accountability and resilience grow alongside it. He also stressed that policy has to remain informed by what is happening on the ground. He said that regulators cannot understand emerging technologies through returns and supervisory observations alone in a rapidly changing environment. Regular engagement with financial institutions, fintechs and technology providers helps identify new use cases and emerging concerns early, while also giving the industry greater clarity about regulatory expectations. He added that emerging technologies are often understood better through carefully controlled use than through speculation alone. He suggested that regulatory sandboxes can play an important role here by allowing genuinely new applications to be tested within defined boundaries before they are deployed more widely.
On the regulatory front, he noted that regulating a technology too early could risk writing detailed rules for a technology that is yet to be fully understood, or for an architecture that may change before the rules take effect. On the other hand, if regulation comes too late, the technology may already be deeply embedded before its risks are fully understood and addressed. Therefore, he added that there is no perfect point between these two outcomes. Besides, he said that policymakers should not lose sight of the people at the other end of technology amid rapid advances in algorithms, tokens, platforms, cloud infrastructure and quantum computing.
For a responsible financial system, he emphasized that purpose, prudence and policy need to move together, and cautioned that purpose without prudence could lead to recklessness, while prudence without purpose could result in stagnation. He said that the objective should not merely be to make finance faster or smarter, but to ensure that technological progress makes finance more useful, resilient and responsive to those it serves. He added that every technological wave has expanded the range of what human beings can do, and that the opportunity now is to ensure that emerging technologies expand not just what finance can do, but also what it can do better for those it serves. He said, “If we can achieve that, emerging technology will have served not merely innovation, but the larger purpose of finance itself.”
