TWO AWARDS, ONE STORY
Global awards for the RBI Governor and a home grown RegTech, puts the spotlight on the rapid makeover of financial supervision in India. EPISODE #127
Dear Reader,
A very Happy Monday to you.
Next month the Reserve Bank of India Shaktikanta Das and the leadership team of SecurEyes, a firm that uses AI to digitise supervisory services, will travel to London to collect their respective awards from Central Banking—a B2B portal that has shaped up as the global information resource on central banking.
While Das will receive the Governor of the Year award, SecurEyes will be feted with the technology services award for its marquee product: RegTrac. The common thread between the two winners is regulation and oversight of the financial sector.
While one is being acknowledged for providing state-of-the-art means of oversight, the other for regulating and guiding the Indian financial sector through the difficult phase following the breakout of the once in a century pandemic.
So this week I write about the implications of this global recognition and what it means for India’s rapidly transforming regulatory landscape. Do read and share your feedback. The cover pix is taken by Shreshth Gupta and sourced from Unsplash.
A big shoutout to Shiv, Gautam, Ranjini, Abhijit, Premasundaran, Vandana and Kamal Monnoo for your informed responses, kind appreciation and amplification of last week’s column. Once again, grateful for the conversation initiated by all you readers. Gratitude also to all those who responded on Twitter and Linkedin.
Unfortunately, Twitter has shut down amplification of Substack links and content—perils of social media monopolies. Which is why I would be grateful if you could spread the word. Nothing to beat the word of mouth.
Reader participation and amplification is key to growing this newsletter community. And, many thanks to readers who hit the like button😊.
THE TECH IN REGULATION
Around the middle of next month, 14 June to be precise, the Reserve Bank of India (RBI) governor Shaktikanta Das and the leadership team of SecurEyes, a home grown tech firm specialising in cyber security and regulatory technology products, will be feted at the annual awards ceremony hosted by Central Banking, the global repository on all things central banking, in London.
While Das will receive the Governor of the Year award, the team from SecurEyes, including Karmendra Kohli, CEO and Seemanta Patnaik, CTO, will be awarded for RegTrac, the product from its stable which uses Artificial Intelligence to allow regulators to proactively monitor risk compliance.
There is a common thread linking the two winners from India: regulation. While one is the country’s financial regulator, the other is a company providing the means for regulators to monitor compliance.
Keep in mind that the idea of regulation is a relatively new idea. Till about three decades ago, the financial sector in India was small and dominated by state-owned enterprises. The rise of the private sector created the need for independent regulators. And, as the economy grew and so did digitisation, the scope and scale of regulation also transformed dramatically—creating the need for new age monitoring tools.
The RBI Governor is being acknowledged for his leadership of India’s central bank during the testing times brought upon by the once in a century pandemic which had dodgy origins in Wuhan, China and in ensuring financial stability in the post-covid phase that was exacerbated by the breakout of conflict between Russia and Ukraine and the shocks unleashed by the rapid raising of interest rates by the US Fed in response to the wave of global inflation.
Similarly, SecurEyes is being recognized for its marquee product, RegTrac, which provides the means for regulatory authorities to obtain a unified view of compliance of all regulatory standards and frameworks by the respective sector.
Governor Das
Not many of us may recall the monetary policy statement from three years ago, just after the covid-19 pandemic struck India.
Looking back, the resoluteness of RBI in the face of unprecedented and extenuating circumstances was a standout. The governor, in his typically understated style, said:
“Life in the time of Covid-19 has been one of unprecedented loss and isolation. Yet, it is worthwhile to remember that tough times never last; only tough people and tough institutions do.”
With the benefit of hindsight it can be safely said that the country’s central bank walked the talk of its boss.
It is particularly striking, since the appointment of Das—little over a year ago in December 2018—was met with considerable derision among armchair writers, sections of social and legacy media, and some political parties.
Some even churlishly questioned the governor’s capability citing his graduate degree in political science, contrasting it with the impressive academic credentials of his predecessors.
The award from Central Banking is a tacit acknowledgement that Governor Das proved his critics wrong.
The press release summed this up best:
“Covid-19 was no doubt the biggest crisis Das has faced so far as RBI chief. But his tenure, which began in December 2018, has been marked by a series of grave challenges, starting with the collapse of a major non-bank firm (ILFS), moving through the first and second waves of the coronavirus, and then, in 2022, Russia’s invasion of Ukraine and its inflationary impact.
At the time of writing, there are new concerns about the risk exposures and potential contagion risks linked to public sector bank loans to companies linked to billionaire industrialist Gautam Adani. But it has also been a time of spectacular innovation for the RBI and for India as a whole.”
RegTech Innovation
The growth of digitisation has created the enabling environment for unprecedented innovation and enhanced the scope for regulatory oversight. Especially in deploying new tools using Artificial Intelligence to crunch tonnes of data.
A caveat may be in order here. RegTech is merely a tool that analyses the data you feed it. If indeed the data is flawed or inadequate then it would be a classic case of “garbage in, garbage out”.
The simple point here is that RegTech is no magic wand. Instead, it is a handy tool that enables real time risk compliance. In a world facing unprecedented uncertainties, risk management can make all the difference.
The remarkable thing about RegTrac, a supervisory tool for central banks, is how quickly SecurEyes was able to move from design to execution. It was on the drawing board in 2017 and rolled-out in 2019. And, four years later it is winning global recognition.
In an interview—that will be aired on StratNewsGlobal this Thursday—Seemanta Patnaik, the company’s Chief Technology Officer, said:
“RegTrac definitely simplifies the regulatory, supervisory responsibility and oversight (by central banks) by using technology driven risk-based supervision and enhances the capability of analysis and correlation to get complete visibility across sectors.”
The Bank for International Settlements—the Basel-based institution supporting central banks worldwide in their pursuit of monetary and financial stability through international cooperation, and acting as a bank for central banks—summed up the import of using such sophisticated tech for enhancing supervision in a recently published paper (the highlight in the quote is my doing).
“A suptech (supervisory technology) strategy should comprise, at a minimum, the following three key elements:
First, ambitious, but achievable, targets (eg which technology will be used in which area of supervision three to five years from now, how this technology will be embedded in the organisation and how it will be funded);
Second, an assessment of today’s data availability, data quality and analytical resources;
And third, a step-by-step action plan on how the supervisory agency will get from the current situation to full implementation of its strategy.”
All of this may sound dense to most of us (including me). But, like the BIS points out, this is rapidly becoming embedded in the DNA of every economic entity.
Going forward, the leadership team of companies, especially its board, will have to equip themselves with sufficient skills to glean the signals from these regulatory tools. Just like they are coming upto speed with the new metrics of ESG (Environment, Social, Governance).
In short, the environment for doing business is getting complicated and tricky. So is regulation. Those at the helm presumably are sitting up and taking note.
Recommended Watching
Sharing the latest on StratNews Global.
Last week I spoke to Pradeep Gupta, the CMD of Axis My India, to unpack the outcome of the just concluded elections in Karnataka.
The exit poll of Axis My India had projected the Congress as an outright winner. Though an outlier forecast, it eventually turned out to be spot on. Gupta, as one reader pointed out, has an enviable strike rate when it comes to calling election outcomes.
In this conversation I sought to elicit Gupta’s feedback on non-traditional factors, like religion and caste, influencing the poll results. To its credit the incumbent regime (BJP) did successfully roll out big ticket infrastructure projects while pursuing social welfare, especially in achieving saturation in cooking gas connections.
I was curious as to whether the growth in aspirations quotient, following the fulfilment of basic needs like cooking gas, has raised the expectations bar of the electorate. Gupta confirmed that new trends were beginning to take shape, though the eventual outcome was not due to any one factor—which is so true.
Do watch and share your thoughts. I am sharing the link below:
My monthly column in Economic Times, taking up from an earlier newsletter, explored the same theme.
The headline may sound misleading, because I have only sought to put the spotlight on the business of aspirations and not attributed the BJP’s defeat to a single cause. Do read.
Sharing a screen grab below:
Till we meet next week, stay safe.
Really good to know. As usual, you cover very well relatively less known but very important topics. Highly appreciated. Thank you
Ajeet
Once again Anil you have brought to the notice of your readers, an event that would have escaped our attention. Recognition of India as a growing financial pillar is important for infusing the required confidence that we are on the right path; hence this article is an important contribution towards national progress. This news will help FDI to flow into a country that has got it's act together, in a shaky international environment. Keep our Grey cells activated. Thank you 😊