Regulations should not create ‘unintended barriers’ to deepening financial inclusion: RBI Governor Sanjay Malhotra

Reserve Bank of India Governor Sanjay Malhotra has emphasised that regulations should not create “unintended barriers” to deepening financial inclusion. Speaking at the curtain-raiser event of the Financial Action Task Force (FATF) Private Sector Collaborative Forum (PSCF) in Mumbai, Mr Malhotra cautioned policymakers against being “overzealous” with their measures, highlighting that legitimate activities should not be stifled.

Commending India’s significant strides in financial inclusion, with 94% of adults now holding bank accounts, Mr Malhotra advised regulators to exercise caution. “It must be ensured that regulations do not create unintended barriers to financial inclusion. We need to be mindful of customer rights and convenience while fulfilling due diligence requirements,” he remarked. He stressed that laws and regulations should target only the illegitimate and illicit with “surgical precision” rather



than becoming blunt tools that inadvertently harm honest individuals.

Advocating for “balanced regulations,” Mr Malhotra suggested adopting a risk-based approach while assessing the impact on people and businesses. He also called for better coordination among stakeholders to avoid unnecessary repetition of the Know Your Customer (KYC) process.

FATF President Elisa de Anda Madrazo, who also spoke at the event, underscored the importance of financial inclusion. Noting that 1.4 billion people worldwide still lack access to financial services, she described this situation as not only unfair but also unsafe. She emphasised that unregulated markets and widespread cash transactions create extensive ecosystems for criminals and terrorists to operate undetected. Therefore, she affirmed that the FATF is committed to promoting financial inclusion globally.