RBI Governor Sets Out Five Priorities to Protect Financial Stability
The Governor of the Reserve Bank of India (RBI), Sanjay Malhotra, gave a special address on "Preserving Financial Stability in an Evolving World" at the 5th Kautilya Economic Conclave in New Delhi. The conclave (October 3 to 5, 2026, theme "Resilience in an Age of Flux") is run by the Institute of Economic Growth in partnership with the Ministry of Finance.
He said the goal of regulators is a financial system that can survive both the shocks they expect and the ones they cannot yet foresee. His key line: financial instability anywhere can become a threat to financial stability everywhere.
He listed five priorities:
Build resilience, not just prevention: shocks will come, so the system must keep giving financial services even under severe stress and stop shocks from growing bigger.
Understand new systemic risks: the next crisis may not start in a bank, or even in finance. It may start with a geopolitical event, a cyberattack or a technology failure. Scenario analysis should be central to risk management.
Better, more detailed data: data on non-bank financial intermediaries (NBFIs), linked exposures, technology dependencies and cross-border positions is still scattered.
System-wide resilience: a strong banking system is necessary but not enough. Non-banks, markets, payment systems, technology infrastructure and critical third-party providers must also be strong.
Innovation must protect trust: AI, tokenisation and new forms of financial intermediation can raise efficiency, but only if sound institutions, settlement finality, singleness of money and financial integrity are preserved.
He ended by saying that if regulators succeed, financial stability stays "largely invisible", and that in central banking this invisibility is perhaps the best measure of success.
Non-Banking Financial Companies (NBFCs) and Their Regulation
A Non-Banking Financial Company, or NBFC, is a company that does banking-like work, such as giving loans or making investments, but does not hold a banking licence. Think of companies that give gold loans, two-wheeler loans, tractor loans, microfinance loans or home loans. They lend money just like a bank, but you cannot open a savings account with them or get a chequebook from them. In India, most NBFCs are registered and regulated by the Reserve Bank of India (RBI).
The RBI Governor said a strong banking system is "necessary, but not sufficient", and named NBFIs as an area where data is still scattered. NBFCs are the biggest part of India's non-bank lending, so their links with banks, markets and technology providers are central to his call for system-wide resilience.
Systemic Risk and Macroprudential Regulation
Systemic risk is the danger that trouble in one part of the financial system spreads and damages the whole system and the wider economy. Normal banking rules (called microprudential rules) check whether each bank is safe on its own. Macroprudential regulation looks at the whole system together: how institutions are linked, and how risk builds up over time. Its aim is to stop one failure from turning into a chain of failures.
The Governor's second and fourth priorities are about systemic risk. He warned that the next crisis may start outside finance, through a geopolitical event, a cyberattack or a technology failure, and asked regulators to map the network of dependencies and make scenario analysis central to risk management.
Tokenisation of Financial Assets
Tokenisation means turning the ownership of a real asset, such as a bond, a share or a bank deposit, into a digital token recorded on a shared digital ledger. The token works like a digital certificate of ownership that can be transferred almost instantly. It promises faster settlement and lower costs. But it also raises questions about trust: is the token always worth what it claims, and is a transfer truly final?
The Governor's fifth priority was that innovation such as AI and tokenisation must strengthen, not weaken, trust. He named settlement finality and singleness of money as properties that new systems must keep, so that efficiency gains do not come at the cost of stability.
- Event: 5th Kautilya Economic Conclave, New Delhi, October 3 to 5, 2026; theme "Resilience in an Age of Flux"
- Organiser: Institute of Economic Growth, in partnership with the Ministry of Finance
- Speech topic: "Preserving Financial Stability in an Evolving World"
- Five priorities: systemic resilience; assessing new systemic risks; better and granular data; system-wide resilience; innovation that strengthens trust
- Named risk sources: geopolitical events, cyberattacks, technology failures
- Data gaps named: NBFIs, interconnected exposures, technology dependencies, cross-border positions
- Sectors named for resilience: NBFIs, financial markets, payment systems, technology infrastructure, critical third parties, cross-border networks
- Trust foundations named: sound institutions, settlement finality, singleness of money, financial integrity
- RBI Financial Stability Report: half-yearly (June and December), first published March 2010
- D-SIBs (2025 list): SBI, HDFC Bank, ICICI Bank