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The RBI governor Sanjay Malhotra has said that the RBI plans to increase offsite surveillance of banks in real-time. RBI has been conducting onsite supervision of the records of banks largely through annual financial inspections and targeted inspections under a risk-based supervision framework focusing on core areas like capital adequacy, asset quality, management, earnings liquidity and systems (Camels).
RBI’s real-time offsite supervision, powered by offsite monitoring and surveillance (Osmos) and advanced data analytics, continuously monitors banks’ financial health between onsite inspections through automated daily/weekly/monthly data submissions, enabling early detection of stress in asset quality, liquidity, and capital.
Offsite supervision is very useful for RBI and Banks also. It helps faster risk identification, resource optimisation by shifting 70-75% of efforts to techdriven analysis, improved data integrity, and quicker RBI interventions like quarterly checks for weak banks.
The RBI collects vast amount of data updated by banks through various platforms provided by RBI and there is still scope for more effective use of this data.
For example, department of supervision can build stronger analytics and supervisory dash boards for enhanced offsite surveillance, to support more continuous monitoring and early risk detection.
How RBI monitors Banks?
The RBI monitors banks through a multi-pronged approach, including on-site inspections, off-site surveillance, setting prudential norms (capital adequacy, asset quality), regular reporting requirements, granting/revoking licenses, and enforcing regulations under the Banking Regulation Act, ensuring financial stability, and protecting depositors’ interests via tools like Prompt Corrective Action (PCA) for underperforming banks.
