Utkarsh 2022

By : Neha Dhyani

Updated : May 4, 2022, 14:00

Utkarsh 2022 is a three-year plan by the Reserve Bank of India (RBI) that aims to improve the regulation and supervision of the central bank. It aligns with the goal of the global central bank to strengthen the regulatory and supervisory mechanisms.

Utkarsh 2022 is a long-term vision for which preparations have been commenced three years in advance for smooth execution.

Utkarsh 2022 Objective

The objective behind Utkarsh 2022 is to streamline the regulatory framework and build a quality framework for the consistent supervision of financial institutions in India. The aim is to ensure continuous and sustainable improvements in banking supervision based on an analytical study of the vulnerabilities of the Indian financial system.

The main objectives are:

  1. Strengthening regulatory and supervisory mechanisms
  2. Enhancing the digitalisation process
  3. Improving financial inclusion
  4. Ensuring efficiency in financial markets through regulatory reform and increased transparency.

Utkarsh 2022 Components

Utkarsh 2022 consists of two components:

  • continuous monitoring of regulatory risks through regular assessment
  • developing ideas for proactive action based on broad macroeconomic insights related to vulnerabilities and threats

It focuses on strengthening the supervisory tools that would help prevent the occurrence of rash financial decisions in the system. To achieve this goal, the RBI has decided to focus on strengthening its macro-prudential tools by refining them from time to time.

Utkarsh 2022 Key Features

Key elements addressed under the scheme are:

  1. Controlling risk at all levels
  2. Increasing the internationalisation of capital
  3. Ensuring patient capital
  4. Developing the institutional structure and human resource pool
  5. Enhancing infrastructure and technology for prudential supervision
  6. Improving the organisation, leadership, marketing, and governance of supervisory institutions.

Utkarsh 2022 Aims

Utkarsh 2022 aims to bring about a paradigm shift in the regulatory framework of India by:

  • Strengthening prudential supervision across different areas such as banking regulation, payment systems regulation, corporate securities regulation including disclosure norms, corporate governance and integrity frameworks etc., to enable greater risk management and monitoring
  • Addressing regulatory gaps at the board level and specific issues related to prudential supervision such as conflicts of interests, overlooking operational issues, and lack of accountability
  • Making the central bank a more proactive regulator in financial stability
  • Developing an institutional framework for assessing the capital adequacy across all financial institutions, including bank holding companies and subsidiaries and small finance banks, payment system operators etc
  • Developing a robust enforcement regime to check non-performing assets (NPAs) and addressing the problem of shadow banking activities
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Utkarsh 2022 Reform Agenda

The reform agenda is projected in four key pillars:

  • Market Structure Financial Stability
  • Monetary Transmission and Payment System
  • Consumer Protection and Education

Utkarsh 2022 Significance

  • The focus is that there has been a lot of positive change in global banking since 2009, yet most systems have not fully adapted to these developments
  • The focus is on developing India's robust, effective and efficient regulatory system
  • RBI will be able to contend with emerging financial market developments by focusing on specific areas, including vigilance monitoring non-bank financial companies (NBFCs), strengthening information-sharing arrangements among market participants and asset quality review

Utkarsh 2022 is a step towards a better financial system, which will help India's national economy and its people. It would help build a strong and resilient financial system by implementing an effective regulatory framework to ensure efficient and transparent monitoring and supervision of all key activities.

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FAQs on Utkarsh 2022

Q.1. How did Utkarsh 2022 come about?

Utkarsh 2022 is based on conducting assessments of the existing regulatory framework and identifying areas (including non-banking financial companies) where further enhancements are required. RBI has prepared a roadmap for achieving this objective to build a robust, effective and efficient regulatory system in India.

Q.2. What are the four areas targetted by Utkarsh 2022?

The four important areas which are being targeted by Utkarsh 2022 are:

  • Strengthening supervisory capabilities to improve the quality and consistency of regulatory supervision
  • Ensuring effective early warning of systemic risks; i.e., identifying systemic risk situations before they materialize
  • Risk assessment and mitigation via a comprehensive risk-based supervisory framework
  • Enhancing market discipline in the financial system

Q.3. What does Utkarsh 2022 stand for?

Utkarsh 2022 is an initiative to develop a supervisory framework for India, which would make the financial system more robust and resilient.

Q.4. What are the main objectives of Utkarsh 2022?

The main objective of Utkarsh 2022 is to strengthen supervisory capabilities to improve the quality and consistency of regulatory supervision. It also aims to ensure effective early warning of systemic risks, i.e., identifying systemic risk situations before they materialize, which would help prevent bank failures before they become a chain reaction.

The second objective is to strengthen risk assessment and mitigation via a comprehensive risk-based supervisory framework, which would make the financial system more resilient to future shocks.

Q.5. What are the key features of Utkarsh 2022?

The key features of Utkarsh 2022 include:

  • Strengthening regulatory and supervisory mechanisms
  • Enhancing the digitalization process
  • Improving financial inclusion
  • Ensuring efficiency in financial markets through regulatory reforms and increased transparency

It also focuses on developing institutional structure, human resource pool and infrastructure for prudential supervision.