RBI Deputy Governor Swaminathan J delivered the 12th G. Ramachandran Memorial Lecture on April 30, 2025, at the Madras School of Economics in Chennai. He spoke on banking supervision and public purpose, drawing from decades of experience as a career banker and regulator. His address offered a rare practitioner’s view of how banking truly works beyond textbooks and balance sheets.
Three Educations in Banking Supervision
Swaminathan J described his career through three distinct lenses: the classroom, the banking counter, and supervision. The classroom, he said, provides the language of economics — concepts like moral hazard, information asymmetry, and systemic risk. However, these ideas only come alive when a banker faces real credit decisions. At the counter, he explained, judgment matters as much as numbers. A profitable business that is constantly short of cash, for example, tells an experienced banker something important that no ratio alone can capture.
Additionally, he stressed that banking supervision shifts the perspective further. A banker focuses on growth and profitability. A supervisor, therefore, must ask whether an institution is truly safe and sound. Good supervision, he argued, is a public good that is difficult to measure precisely because its greatest value lies in prevention — crises avoided, frauds stopped, and depositors protected.
What Banking Supervision Means for India’s Financial System
The Deputy Governor warned against underestimating the costs of weak oversight. A lightly supervised system may appear efficient in the short term. As a result, however, risks can accumulate quietly, and the eventual burden falls on depositors, taxpayers, and the broader economy. Meanwhile, he noted that India’s rapidly evolving financial landscape — with digital lending, instant payments, and algorithmic credit decisions — demands even sharper institutional discipline.
He urged students of economics to combine technical knowledge with judgment and a sense of public purpose. Finance, he reminded them, has consequences far beyond the balance sheet. He quoted the Tamil poet Thiruvalluvar: “Learn thoroughly what should be learnt, and let conduct be worthy of the learning.”
Swaminathan J also paid tribute to G. Ramachandran, a distinguished civil servant who served as Finance Secretary to the Government of India and later as Executive Director of the Asian Development Bank. His career, the Deputy Governor said, is a reminder that economics and public policy derive their meaning from their impact on people and institutions.
Source: RBI Speeches
