Banking Regulation & Supervision

 Regulatory Framework:

The regulatory framework comprises a set of policies, guidelines, prudential standards and allied processes which cover the following key areas:

  1. Licensing Regime: Licensing of new Commercial (Conventional & Islamic) and Microfinance banks and facilitate local and overseas Branch Expansion of Banks/DFIs/MFBs so as to attain maximum financial inclusion in sustainable manners. Further, privatization of Public Sector Banks and requests for the schemes of amalgamation/mergers of banks are processed.

  2. Prudential Regulations: The State Bank has issued different sets of Prudential Regulations which prescribe the minimum standards for risk management, operations, and fair treatment to the customers. These regulations duly cater the unique features and underlying risks of respective business sectors i.e. large Corporate financing, Small and Medium Enterprise (SME) financing, Consumer financing, Micro financing and Agriculture financing. Further, a comprehensive regulatory framework on Branchless Banking is in place which aims to promote access to finance on sustainable basis.

  3. Corporate Governance Regime: Policy formulation and its enforcement to ensure good Corporate Governance standards in the banking industry and application of Fit & Proper criteria for key executives and board of directors.

  4. Capital Adequacy Regime: Effective implementation of capital adequacy regime in line with Basel Accord, and development and strengthening of related policies and instructions for the banking sector.

    Basel Accord & Implementation:

  5. AML/CFT Regime: Develop, review and update regulatory framework on AML/CFT as per international standards and practices.

  6. Policy Environment & Market Discipline: Issuance and review of guidelines on risk management, internal controls, financial disclosure and other key areas, and the panel of approved auditors (who are eligible to audit the banks and DFIs) is ensure quality of statutory audit and strengthen the market discipline. 

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