"The Reserve Bank of India (RBI) is considering a comprehensive overhaul of its penalty system, contemplating potential increases based on factors such as the size and systemic importance of regulated entities, along with the frequency of repeat offenses. The proposed changes include the exploration of clawback provisions for payouts to CEOs and key management personnel, particularly impacting state-run banks. Speculation also surrounds the potential imposition of additional capital charges, introducing an extra layer of financial responsibility and potentially reshaping risk management practices. This initiative aligns with the RBI's broader goal of enhancing corporate governance standards within regulated entities, emphasizing the importance of robust governance structures for financial system stability and integrity. The recent focus on governance matters, highlighted in a meeting with the boards of state-run and private banks in May, is seen as a continuation of the ongoing review. The RBI's commitment to enforcing regulatory compliance was underscored by recent penalties imposed on Axis Bank, Manappuram Finance, and Anand Rathi Global Finance, reflecting its dedication to maintaining regulatory standards across diverse financial entities."