Overview

• Deputy Governor M. Rajeshwar Rao detailed the approach in a speech at IIM Kozhikode’s DoPT programme that the RBI posted on its website on Wednesday.
• The RBI says the move aims to provide operational flexibility to banks, NBFCs, payment firms and fintechs while holding them to defined regulatory outcomes.
• To improve compliance, the central bank is adding examples, FAQs and illustrations to regulatory documents and pruning redundancies.
• Rao called for more proactive, technology- and data-driven supervision, including horizon risk scanning and work with domain experts to track emerging risks.
• He said principles- and outcome-based frameworks suit mature markets, with rule-based measures retained for consumer protection, and noted interest in using behavioural economics to improve consumer outcomes.