Regulators Must Work Together To Minimise ‘Harmful Overlaps,’ Says RBI’s Swaminathan

RBI Deputy Governor Swaminathan J has emphasised the need for greater coordination among regulators to minimise "harmful overlaps" in an interconnected business environment, while closing regulatory gaps without hindering innovation.

Speaking at the Gatekeepers of Governance Summit last week, Swaminathan noted that modern businesses are highly complex. A listed company today can be part of a large conglomerate that includes banks, NBFCs, insurers, brokers, payment firms, technology subsidiaries, overseas arms, and associates.

He explained that the regulatory landscape spans multiple domains-company law, securities regulation, listing rules, sectoral regulators for banking, insurance, pension, competition, insolvency, accounting and audit oversight, market conduct rules, data and cyber requirements, as well as several enforcement agencies. Additionally, there are international obligations, exchanges, depositories, self-regulatory organisations (SROs), and state-level authorities.

"In such a world, some overlap is inevitable. That is not a bug. Overlaps can also act as layers of a safety net, ensuring that if one control misses an issue, another may catch it," he said.

Swaminathan warned, however, that conflicting rules, duplicated compliance, and uncoordinated enforcement could create unnecessary complications. These, he said, are avoidable through better regulatory collaboration.

He added that emerging technologies, activities, and business models sometimes fall outside existing regulations, creating gaps that must be addressed.

"So yes, both gaps and overlaps exist. The task for regulators is to work together, minimising harmful overlaps and closing material gaps, without impeding innovation," he stated.

Swaminathan further underscored the importance of balancing entity-based and activity-based regulation, scaling requirements according to risk and complexity, and pursuing outcome-based regulation suited to market maturity.