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Informist, Thursday, Sep 5, 2024

 

--Banking secy: Need to fully leverage available fintech potential 

--CONTEXT: Banking Secy Nagaraju's comments at FIBAC 2024 conference 

--Banking secy: Banks need to careful of cyberthreats 

--Banking secy on cyberthreats: Banks need to focus on compliance 

--Banking secy:Banks need to take more initiatives on green financing 

--Banking secy to bks: Never compromise risk assessment to give credit 
--Banking secy: Banks need to replace ageing infrastructure 
--Banking secy: Banks need to take risk at initial stage of start-ups 

MUMBAI – Banks must integrate fintech solutions to boost their reach and effectiveness, M. Nagaraju, secretary in the finance ministry's Department of Financial Services, said at the FIBAC 2024 banking conference in Mumbai today. 

 

"Banks have taken serious support in the fintech thing. Of course, the cyber-security threats, our firewalls, all those things we will maintain, but we need to leverage very clearly the fintech that is available to reach out to even the last member of society," Nagaraju said. He emphasised the growing convergence between traditional finance and fintech, and highlighted the complementary roles these play.

 

Nagaraju also acknowledged that while fintech's reliance on the country's digital public infrastructure has been instrumental in its growth, it also brings new challenges.

 

He stressed the importance of maintaining stringent cybersecurity measures to counteract emerging threats. "With greater trust in technology and across platforms, institutions, banks need to be very careful on cyber threats emanating from the system, and be ready to tackle them in time," Nagaraju said. He called for strong focus on compliance to safeguard against operational risks.

 

Addressing broader concerns, Nagaraju noted the need for banks to adapt their credit frameworks in response to the accelerating impact of climate change. He advocated integrating environmental risks into financial portfolios to ensure resilience against future disruptions.

 

"Considering likely gradual acceleration of the adverse impact of the rapid climate change across the world, including India, we need to be conscious of the risk and build our portfolios according to that,” he said.

 

Commenting on green financing initiatives, Nagaraju proposed that the Indian Banks' Association play a more active role in promoting sustainable infrastructure projects. "We need to take a little more initiative on green financing. I think IBA can actually look at this green financing potential, so that we can actually reduce environmental impact, adverse environmental impact on green financing, and promote better infrastructure projects."

 

He said the banking sector must evolve to meet future demands and support the growing start-up ecosystem. "Banking is the key, it is the base on which everything will be built. And then, in our endeavour to provide more trade, we should actually never think of compromising our standards of risk. We need to be very careful, very agile in building very robust risk assessment systems, so that banking system is strong," he said. 

 

To achieve the economic targets set, both the banking system and the government must work in tandem to facilitate substantial trade flows, he said. This necessitates not only replacing outdated banking infrastructure but also investing in new technologies to enhance operational efficiency and risk management. "Infrastructure is going to be multiplied and a lot of infrastructure that we have built in the past is ageing, and we need to replace those."  

 

Nagaraju also underscored the importance of proactive engagement with start-ups. He sought that banks take calculated risks with emerging businesses and foster a culture of innovation by providing financial support and guidance from the outset. "We have a large number of start-ups, even the start-up economy, but we are not able to sustain that start-up economy. We need to identify, educate the start-up ecosystem...the banking community needs to take risk at the initial stage of startup economy," he said.

 

Nagaraju believes that by integrating risk management with start-up funding and nurturing young talent, the banking sector can play a pivotal role in driving economic progress and creating employment opportunities, laying a solid foundation for future growth.  End

 

Reported by Sachi Pandey

Edited by Avishek Dutta

 

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