Conceding that the central bank was not the repository of all knowledge, he said, “Consultation is [a] key pillar of our policymaking. The RBI, whenever it publishes or finalises its regulations or master directions, does do a wide public consultation. This is one thing that I will continue to do so.”

Now, Malhotra may have just been reiterating RBI’s position, but he put the spotlight on a significant move of his predecessor Shaktikanta Das, who took consultation into a higher orbit.

In May 2023, Das held an interaction with the entire boards of state-run and private banks—a first-of-its-kind initiative. Governance was on top of the agenda, and Mint Road’s top brass didn’t shy away from airing their views, which bankers said were the bluntest till date.

RBI Deputy Governor M. Rajeshwar Rao put things in perspective: “As we strive to become a developed country by 2047, financial institutions will need extraordinary amounts of financial resources to support growth to realise our vision for a brighter tomorrow. Raising these resources would not be a constraint for financial intermediaries with robust governance frameworks as they can command a governance premium.”

Indeed, India’s aim to become a $5 trillion economy, or even bigger, will test the country's banks like never before.

Not only will the banks be called upon to intermediate credit in a much bigger and sophisticated manner, they will also need scale and capital in dollops to fund India Inc.'s growth appetite. And the RBI is pulling out all stops to ensure that the banking system is well prepared.

GOVERNANCE AND REGULATION