RBI taking steps to ensure your money is safe, here’s how

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In view of emerging financial challenges, the Reserve Bank of India (RBI) has decided to strengthen the banking sector by reviewing the Risk-Based Supervision (RBS) model of the banking sector. The RBS model is a comprehensive system that assesses risks within the financial system by focussing more on the resolution of those risks.

The RBI will supervise banks, urban cooperatives banks, non-banking financial companies, and all Indian financial institutions, with the help of the RBS model.

Strengthening the RBS

The RBI aims to review the supervisory processes and mechanisms to make the extant RBS model more robust.

Their purpose is to ensure that the financial systems are capable of addressing emerging challenges while removing any inconsistencies arising.

The RBI also invited bids from technical experts/consultants to carry forward the process for banks.

In the case of Urban Cooperative Banks (UCBs) and Non-Banking Finance Companies (NBFC), the Expression of Interest (EOI) for ‘Consultant for Review of Supervisory Models’ said the supervisory functions pertaining to commercial banks, UCBs, and NBFCs are now integrated, with the objective of harmonizing the supervisory approach based on the activities/size of the supervised entities (SEs).

The annual financial inspection of UCBs and NBFCs is largely based on the CAMELS model. The CAMELS model ensures- Capital Adequacy, Asset Quality, Management, Earnings, Liquidity, and Systems & Control.

The regulatory body said that it will also review the existing supervisory rating models under the CAMELS approach for improved risk capture and harmonizing the supervisory approach across all SEs.