As regards banking regulation and supervision, there is no unique theoretical model or just one practical approach to the regulation and supervision of a financial system. India has traditionally followed an institution-based system of regulation. In India, the current model of regulation with the Reserve Bank exchanging relevant information with other regulators in a synchronised manner is functioning effectively.
The supervisory activities of the Reserve Bank have benefited from its price stability objective, and it is recognised that safety and soundness of banks must be evaluated jointly with its responsibility to ensuring stability and growth in the economy.