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Mckinsey and Accenture to develop RBI’s AI project for its supervisory function

Utkarsh Classes 14-08-2023
Mckinsey and Accenture to develop RBI’s AI project  for its supervisory function Economy 4 min read

The Reserve Bank of India (RBI)  has selected global consultancy firms McKinsey and Company India LLP and Accenture Solutions Pvt Ltd India to develop systems using artificial intelligence (AI)and machine learning(ML) for its supervisory functions.

The RBI intends to use advanced analytics, artificial intelligence, and machine learning to analyse its huge database and to  improve its regulation and supervision over banks and NBFCs. 

Across the world, regulatory and supervisory authorities are using machine learning techniques (commonly referred to as 'suptech' and 'regtech') for assisting supervisory and regulatory activities.

Regulatory and Supervisory function of RBI 

RBI is the apex central bank of India which has been given the regulatory and supervisory power over banks and Non Banking Financial Companies (NBFC).  RBI derives its regulatory and supervisory power from the Banking Regulation Act, 1949 and Reserve Bank of India Act, 1934

The Reserve Bank of India regulates NBFC under the Reserve Bank of India act 1934.

However there is a difference between regulatory and supervisory functions.

Difference between Regulatory and Supervisory function 

Regulation refers to the written rules that define acceptable behaviour and conduct of the financial institutions.  Granting of licence and cancellation of licence is an important function of regulation.

Supervision refers to the enforcement of these rules. In banking supervision refers to the auditing and supervision of the accounts of the financial institutions .

 Regulatory and Supervisory function performed by institutions  in India 

Banks 

Regulator 

Supervisor

Scheduled Commercial Banks (Public sector Banks, Indian Private Banks, Foreign Banks, Small Finance Banks, Payment Banks )

RBI

RBI

Regional Rural Banks 

RBI

NABARD

Local Area Banks

RBI

RBI

Primary Urban Cooperative Bank 

RBI

RBI

Scheduled State Co-operative Banks  

RBI

NABARD 

District Central Co-operative Banks 

RBI

NABARD

 

 

 

 

 

 

 

 

 

 

 

 

Reserve Bank of India 

Reserve Bank of India was set up on the recommendation of the Royal Commission on Indian Currency and Finance also known as the Hilton-Young Commission.

RBI was set up on 1 April 1935 , under the Reserve Bank of India act 1934.

It was nationalised in 1949 and the government of India is the owner of RBI.

Its central office of the RBI was moved from Kolkata to Mumbai in 1937.

It is the supreme regulatory and monetary authority in India .

Governor :Shaktikanta Das (25th Governor of RBI).

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