India’s accountability puzzle: Who’ll regulate the regulator?

The recent arrest of the Fino Bank managing director in Bengaluru over allegations that sensitive data was siphoned from a fintech partner’s accounts, causing a revenue loss of over Rs 12 crore, has barely attracted media attention. This is despite the bank clarifying that the matter concerned external programme managers and business partners, not its own GST compliance. A few years earlier, in Jaisalmer, a former public sector bank chairman was arrested over allegations about the sale of a defaulted property to an asset reconstruction company – a transaction approved and reviewed at lower levels.

While no one argues that wrongdoers should not be punished, the fact remains that over two dozen bank chiefs have been arrested similarly in the past decade and a half. Convictions, however, have been vanishingly rare – most cases have lingered in court or ended in acquittals. Arrests, in other words, have become more about optics than outcomes. And here lies the irony: India’s banking and financial sector is in rude health, with profits at record highs and bad loans at multi-year lows. The acts of negligence, if proven, were never alleged to have cost lives; only monetary losses were alleged. Yet elsewhere, negligence has repeatedly cost lives, but custodial accountability remains indulgently absent. Examples abound.

Consider adulterated medicines. Several countries, including Gambia, Uzbekistan, and the Marshall Islands, have complained that contaminated Indian drugs were linked to child deaths. Within India too, tragedies have struck: in Madhya Pradesh, dozens of children died after consuming cough syrup tainted with diethylene glycol. Arrests did follow, but only of small manufacturers, pharmacists, or distributors. No senior drug regulator was taken into custody, despite the reputational damage to India’s pharmaceutical industry and the devastating loss of lives.

In Indore, scores fell ill, and some died after drinking poisoned municipal water. In Assam’s tea gardens, contaminated groundwater has led to outbreaks of diarrhoeal disease. Similar incidents have occurred in other states. But arrests stopped at junior staff or contractors. And this is apart from repeated stories of public hospitals malfunctioning, resulting in avoidable deaths, and other cases of supervisory negligence in the real sector, where lapses have cost lives but top-level accountability has been conspicuously absent.

Transport tragedies tell a similar story. The Air India crash of 2025, which killed over 240 people, raised uncomfortable questions about whether safety systems and regulatory vigilance were adequate. Railways, too, have witnessed repeated derailments and collisions. In countries like Japan or the UK, such incidents are rare, and when they do occur, they typically trigger resignations at the highest levels. In India, however, responsibility is diffused, and arrests rarely climb beyond the lowest rung of staff. And then, there is the daily carnage on India’s roads: wrong-side driving, two-wheelers on pavements, reckless speeding – all leading to more than 150,000 deaths every year. Drivers are fined, occasionally jailed. But has any traffic commissioner, municipal chief, or head of a road transport authority ever been arrested for failing to enforce the law uncompromisingly?

Urban pollution completes the picture. Thirty-nine of the world’s most polluted cities are in India, with Delhi almost topping the global charts. Millions suffer, thousands die prematurely. Contractors may be fined, but pollution control boards and municipal commissioners remain untouchable.

This imbalance in approach – swift arrests of bank chiefs on mere suspicion, indulgent treatment of regulators in life-and-death sectors – is not witnessed elsewhere. In the United States, Europe, Japan, or even China, accountability mechanisms are clearer: when oversight fails, senior officials resign, are investigated, and face consequences. India’s oddity lies in the selective use of custodial action, where top financial executives are paraded for optics based on mere allegations, while regulators in health, transport, and infrastructure escape scrutiny despite recorded deaths of innocents.

Why does this occur and persist? One explanation may be a colonial hangover: inherited traditions from a time when officials, mostly drawn from the colonising power, were treated as beyond the reach of consequences, while private actors were made examples of. That mindset perhaps lingers, producing a culture in which regulators are shielded, and executives are expendable. However, India’s growth story cannot rest on a financial sector that outpaces a struggling real economy, nor on a regulatory culture that allows the regulators themselves to escape accountability while citizens pay the price. Should not thus the question we must ask for the next reform be whether reform lies only in changing laws for ‘others’, or also in tightening laws for the guardians? Quis custodiet ipsos custodes?

The writer is the former chairman of the Export Import Bank of India is a banker with a theory of everything.

Disclaimer: The views expressed above are the author's own. They do not necessarily reflect the views of DH.