In a recent address at the Madras School of Economics, Swaminathan J, Deputy Governor of the Reserve Bank of India (RBI), warned that a lightly supervised financial system, while appearing efficient due to lower costs and faster growth, can mask significant risks. He stated that if this growth is based on weak governance or poor credit standards, the repercussions extend beyond shareholders to depositors, borrowers, taxpayers, and the broader economy. Swaminathan emphasized that the true value of supervision lies in its ability to mitigate the likelihood and impact of financial instability. He noted that while the costs associated with supervision, such as compliance teams and reporting systems, are clear and measurable, the benefits are often less visible, creating a paradox in effective oversight. The Deputy Governor highlighted that supervision should transcend mere compliance, focusing instead on understanding and addressing underlying risks. He pointed out that during periods of rapid growth, banks might seem successful with expanding balance sheets and profits, yet supervisors must critically assess whether this growth is supported by sound practices. Ultimately, regulatory oversight must prioritize the public interest to ensure the safety and stability of the financial system.