Future-Proofing India’s Financial Regulators: The Urgent Need For High Potential Talent

Traditionally, regulatory institutions have been perceived as bastions of bureaucracy, often stifling innovation and discouraging the questioning of established norms. This environment suppresses curiosity and hinders the development of forward-thinking strategies.

Sir Ken Robinson, a renowned educationalist, has extensively discussed how traditional education systems can diminish innate curiosity. In his seminal TED Talk, 'Do Schools Kill Creativity?', he argued that “we don’t grow into creativity, we grow out of it. Or rather we get educated out of it.” Robinson contended that many education systems prioritise conformity to set curricula and standardised testing, which can hinder natural inquisitiveness and creativity.

This insight is equally pertinent to our financial regulators, who must cultivate a culture that encourages inquisitiveness and innovative thinking. As stewards of the financial system, regulators must be equipped to anticipate and mitigate the sophisticated maneuvers of both private and public enterprises that may pose risks to market integrity and citizen welfare. This demands a cadre of professionals who are not only highly intelligent but also possess the ability to stay ahead of potential malfeasance.

Remarkably, fewer than 30,000 professionals across India’s financial regulatory institutions manage to uphold the resilience and stability of a 140-crore-strong economy. Even within these regulators, the 80-20 principle (Pareto Principle) holds true—a small percentage of highly skilled, forward-thinking professionals bear the weight of financial stability, risk mitigation, and regulatory evolution. However, if this crucial minority is not nurtured, recognised, and expanded, the entire system risks stagnation.

This challenge is even more pressing in a nation where 80 crore individuals are under 35, driving rapid shifts in financial behaviour, digital adoption, and risk perception. Regulatory agility in understanding how this young consumer cohort operates and transacts is just as critical as supervising financial institutions. To keep pace, regulators cannot afford high attrition in entry-to-mid management ranks; they must identify, train, and retain HiPo talent within these cohorts to ensure continuity, deep consumer insight, and proactive policymaking.

Traditionally, regulatory institutions have been perceived as bastions of bureaucracy, often stifling innovation and discouraging the questioning of established norms. This environment suppresses curiosity and hinders the development of forward-thinking strategies.

Sir Ken Robinson, a renowned educationalist, has extensively discussed how traditional education systems can diminish innate curiosity. In his seminal TED Talk, 'Do Schools Kill Creativity?', he argued that “we don’t grow into creativity, we grow out of it. Or rather we get educated out of it.” Robinson contended that many education systems prioritise conformity to set curricula and standardised testing, which can hinder natural inquisitiveness and creativity.

This insight is equally pertinent to our financial regulators, who must cultivate a culture that encourages inquisitiveness and innovative thinking. As stewards of the financial system, regulators must be equipped to anticipate and mitigate the sophisticated maneuvers of both private and public enterprises that may pose risks to market integrity and citizen welfare. This demands a cadre of professionals who are not only highly intelligent but also possess the ability to stay ahead of potential malfeasance.

Remarkably, fewer than 30,000 professionals across India’s financial regulatory institutions manage to uphold the resilience and stability of a 140-crore-strong economy. Even within these regulators, the 80-20 principle (Pareto Principle) holds true—a small percentage of highly skilled, forward-thinking professionals bear the weight of financial stability, risk mitigation, and regulatory evolution. However, if this crucial minority is not nurtured, recognised, and expanded, the entire system risks stagnation.

This challenge is even more pressing in a nation where 80 crore individuals are under 35, driving rapid shifts in financial behaviour, digital adoption, and risk perception. Regulatory agility in understanding how this young consumer cohort operates and transacts is just as critical as supervising financial institutions. To keep pace, regulators cannot afford high attrition in entry-to-mid management ranks; they must identify, train, and retain HiPo talent within these cohorts to ensure continuity, deep consumer insight, and proactive policymaking.

Robust financial regulation will be competitive advantage. Countries such as the United States, the United Kingdom, and Singapore are actively investing in high-potential talent within their regulatory bodies, recognising that financial stability and innovation depend on skilled professionals who can outthink financial criminals and predict market shifts. India, on the other hand, still relies on grade-based promotions and tenure-driven career progressions, often failing to retain top talent who seek more dynamic opportunities elsewhere mid-career, hereby leaving a potential homegrown leadership vacuum.

The financial landscape is evolving at an unprecedented pace, demanding that regulators keep up with emerging complexities. Technologies such as blockchain, decentralised finance, algorithmic trading, and AI-driven lending are reshaping markets, blurring the lines between regulated and unregulated activities.

Without specialised expertise, regulators risk either over-regulating and stifling innovation or failing to detect risks before they escalate. The global interconnectedness of markets, coupled with emerging risks such as cyber threats, climate change, and geopolitical tensions, has added layers of complexity to financial oversight. Regulatory bodies must navigate these challenges to maintain market integrity and protect investors. These will require a new generation of regulators who can navigate finance, technology, and geopolitics.

The traditional approach of “learning on the job” is no longer sustainable—regulators must proactively attract and nurture HiPo talent from within. Despite having one of the world’s largest pools of young financial professionals, India struggles to develop future regulatory leaders due to several challenges. Rigid hierarchical structures further restrict exposure to international best practices, slowing professional development. Additionally, salary and incentive mismatches make it difficult for regulators to compete with private-sector compensation, leading to talent drain and weakening the long-term effectiveness of financial oversight.

To strengthen India’s financial regulatory system, a well-structured HiPo talent initiative should be implemented with the following core components:

1. Coaching and Mentorship: Pairing high-potential regulators with seasoned executives within and outside regulatory bodies will help develop leadership acumen and transfer critical knowledge.

2. Job Rotations & Stretch Assignments: Providing exposure to diverse challenges broadens experience and strengthens problem-solving skills, ensuring regulators can anticipate rather than react to risks.

3. Continuous Learning & Global Exposure: Encouraging executive education, international secondments, and real-time learning will ensure HiPo regulators stay ahead of global trends and emerging threats.

Moreover, fostering an environment where critical thinking, technological curiosity, and forward-looking policymaking are encouraged will redefine the perception of regulators — not as bureaucratic enforcers but as strategic architects of financial resilience. The significance of organisational culture and ‘tone at the top’ cannot be overstated. Regulators rightly mandate that financial institutions establish ethical governance frameworks — shouldn’t regulatory bodies apply the same principles internally? Leadership’s commitment to integrity, innovation, and excellence sets a precedent that permeates the entire organisation.

India’s ambition to become a 'Viksit Bharat by 2047' hinges on the strength of its financial regulatory system. The next decade will determine whether India emerges as a global financial powerhouse or struggles with unchecked systemic risks. Investing in HiPo talent ensures that regulatory bodies are not just enforcers of compliance but architects of a resilient, future-ready financial ecosystem.

Dr. Srinath Sridharan is a policy researcher and corporate advisor.

Disclaimer: The views expressed here are those of the author, and do not necessarily represent the views of NDTV Profit or its editorial team.