RBI Governor Dr Raghuram Rajan on Thursday said that more scrutiny is needed over non-banking financial institutions while the public sector banks already work under the supervision of multiple agencies.Speaking at the Central Bank in Colombo this evening on the need for Capital regulation, Dr Rajan cautioned against the tendency of over regulation which constrains the banks in times of trouble.He advocated careful regulation during financially good times, when the likelihood of malpractices tend to be greater.Earlier in the day, a bilateral agreement was signed by Sri Lanka's Central Bank Governor Ajith Nivard Cabraal and RBI Governor Raghuram Rajan.