RBI deputy governor warns governance lapses behind financial failures
Speaking at the 3rd International Finance and Accounting Conference (IFAC) at the Indian Institute of Management Jammu, Swaminathan highlighted the human and organizational factors behind financial crashes. “People knew what was going wrong but they didn’t speak up. Or they spoke up but no one listened. Or everyone noticed the red flags but incentives pushed them to look the other way,” he said.
Swaminathan emphasized that not only technology or capital but also strong leadership, judgment and discipline are required to realize India’s 2047 Viksit Bharat vision. “It’s about what you choose to reward, what you choose to question, and what you choose to fix early,” he added, underlining the importance of proactive management.
He warned that in today’s financial environment, scale and speed can be double-edged swords if not anchored by robust controls. Modern products, platforms and credit models can now reach millions of users within months, exacerbating weaknesses rather than containing them. “If the design is poor, the controls are weak, or the incentives are misaligned, harm can scale quickly,” Swaminathan said.
The lieutenant governor explained that technology acts as a force multiplier. A flawed underwriting model, an undertested digital product, or poorly aligned sales incentives won’t just affect a few customers; It can affect millions almost simultaneously.
Swaminathan’s words are a reminder that sound governance, disciplined leadership and careful incentive structures are critical to ensuring the stability of India’s rapidly evolving financial system.
With inputs from TOI
