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Informist, Monday, Jul 29, 2024

 

--RBI Das: Endeavour to promote sustainable, resilient fincl sector 
--RBI Das:Goal to balance effective regulation with fincl innovations 
--RBI Das:Regulatory, supervisory framework must be more sophisticated 
--RBI Das: Digitalisation may induce HR challenges in fincl sector 
--RBI Das: More digital inter-connectedness may cause systemic risks 
--RBI Das: Vendor and third-party risk a challenge of digitalisation 
--RBI Das: Customer protection, data bias risks of digitalisation 
--RBI Das: Cybersecurity, data privacy challenges of digitalisation 
--RBI Das: India's digital journey setting benchmark for peer econs 
--RBI Das: Digitalisation lowering India's remittance costs 

--RBI Das:Fincl mkts efficient, integrated on digital fin innovations

--RBI Das:Fin digitalisation improving access to affordable fincl svcs

--RBI Das: Fin digitalisation paving way for next-generation banking

--RBI Das: Digital revolution diversifying role of fincl regulators 

--RBI Das: India leading digital revolution on strong public infra

--RBI Das: Digital transformation reshaping conventional fin notions 

--CONTEXT: RBI Das' comments in Report on Currency and Finance FY24 

--RBI Das: Digital wave embracing world unprecedented, transformative 

 

NEW DELHI – Increased digital interconnectedness of the economy and financial system could lead to systemic risks, Reserve Bank of India Governor Shaktikanta Das said. 

 

"...digitalisation also presents challenges related to cybersecurity, data privacy, data bias, vendor and third-party risks, and customer protection," Das said in the foreword of the RBI's Report on Currency and Finance for 2023-24 (Apr-Mar), released today.

 

Emerging technologies can also introduce complex products and business models that contain risks which users may not fully understand, such as a rise in fraudulent applications and mis-selling through dark patterns, Das said. Digitalisation can lead to human resource challenges in the financial sector, which would force strategic investments in upskilling and reskilling, he said.

 

"In this rapidly evolving landscape, balancing financial stability, customer protection and competition will remain the key policy challenge," the governor said. The endeavour would be to promote a domestic financial sector that is resilient and sustainable, he said.

 

To address such challenges, and future-proof the financial system, regulatory and supervisory frameworks must scale up and become more sophisticated, Das said. "The goal is to balance effective regulation with fostering financial innovations in a safe, robust and trustworthy ecosystem."

 

The digital transformation is reshaping the conventional notions of finance with the participation of financial technology companies and large corporations, with the increased use of frontier technologies like artificial intelligence and machine learning, Das said. "In turn, this revolution is expanding and diversifying the role of central banks and financial regulators," the RBI governor said.

 

At the same time, India's digital journey is setting a benchmark for peer economies, with the RBI also pushing initiatives like rupee internationalisation, spreading connectivity of the United Payments Interface, and sharing its experience with other countries, the governor said. On the external front, digitalisation was driving growth in India's services' exports and lowering remittance costs. 

 

"India is leading the global digital revolution, emerging as a frontrunner on the back of its robust digital public infrastructure, rapidly evolving institutional arrangements, and a growing tech-savvy population," Das said. India's digital public infrastructure was also transforming into a global public good, he said.

 

NPCI International Payments Ltd, a wholly-owned subsidiary of National Payments Corp of India, has reached out to more than 80 countries to link India's Unified Payments Interface with their fast payment systems, the finance ministry said earlier this month. NPCI has also executed agreements with more than 20 payment partners covering over 30 countries.

 

In July 2022, the Reserve Bank of India had announced measures to increase the use of the rupee in foreign trade, allowing exports and imports between two trading partner countries to be invoiced and settled in rupee denomination and exchange rate.

 

"The digital wave embracing the world is unprecedented and transformative. Digitalisation is driving innovation and efficiency, fostering a new model of economic growth, and facilitating quality improvements," Das said.

 

Such innovations also made financial markets more efficient and integrated, the RBI governor said. Digitalisation in finance was paving the way for next-generation banking in India, enhanced cost-efficient direct benefit transfers and improved access to financial services at affordable costs, Das said. He highlighted India's development of the UPI, and the central bank digital currency, or e-rupee, pilots introduced in 2022.

 

"The digital lending ecosystem is becoming vibrant with initiatives such as the Open Credit Enablement Network, the Open Network for Digital Commerce and the Public Tech Platform for Frictionless Credit," Das said.  End

 

Reported by Aaryan Khanna and Shubham Rana

Edited by Aditya Sakorkar

 

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