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On August 26, 2024
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RBI Constantly Working on Policies, Platforms to Make India's Financial System Strong: Governor Shaktikanta Das
Reserve Bank Governor Shaktikanta Das on Monday said the central bank is constantly working on policies, systems, and platforms to make the country's financial sector strong, nimble and customer centric. Addressing the RBI@90 Global Conference on 'Digital Public Infrastructure and Emerging Technologies', Das recalled various initiatives being taken by the RBI with regard to Unified Lending Interface (ULI) and Central Bank Digital Currency (CBDC). The Governor also said that the UPI system has the potential to evolve into a cheaper and quicker alternative to the available channels of cross-border remittances and "a beginning can be made with small value personal remittances as it can be quickly implemented". According to the Economic Survey tabled in Parliament in July, remittances to India, the second largest source of external financing after service exports, are projected to grow at 3.7 per cent to USD 124 billion in 2024 and at 4 per cent to reach USD 129 billion in 2025. Das said the Reserve Bank of India is looking forward to the journey towards RBI@100 with considerable optimism. "We are constantly working on devising policies, approaches, systems and platforms that will make our financial sector stronger, nimble and customer centric," he said. Speaking on the theme of DPI and emerging technologies, he said over the last decade, the traditional banking system has undergone an unprecedented technological transformation. This process is likely to become even more intense in the coming years, he added. He said DPI spurs market innovation by reducing transaction costs, democratising access, maintaining competition through interoperability, and attracting private capital. Referring to the country's experience, Das said "DPI has enabled India to achieve, in less than a decade, levels of financial inclusion that would have otherwise taken several decades or more". Digital Public Infrastructure refers to basic technology systems, created mainly in the public sector, which are openly available to users and other developers. India's DPI journey is a unique model, wherein the base technical infrastructure is built, operated and managed in the public sector, while the private sector accesses the DPI to create innovative customer facing services. "The advantage of developing DPI in the public sector is that typically the private sector would be averse to capital investment to create infrastructure with uncertain returns," the Governor said and added that privately created infrastructure may not also be amenable to democratised access or interoperability. The Governor talked about India's advancements in the field of digitalisation of the financial services. He further said Unified Payments Interface (UPI), a real-time payment system, has emerged as a robust, cost-effective and portable retail payment system and is attracting active interest across the globe. "Continuing on this journey of digitalisation of banking services, last year we launched the pilot of a technology platform which enables frictionless credit. From now on, we propose to call it the Unified Lending Interface (ULI)," he said. The ULI platform facilitates seamless and consent-based flow of digital information, including land records of various states, from multiple data service providers to lenders. This cuts down the time taken for credit appraisal, especially for smaller and rural borrowers. He said that by digitising access to the customer's financial and non-financial data that otherwise resided in disparate silos, ULI is expected to cater to large unmet demand for credit across various sectors, particularly for agricultural and MSME borrowers. Based on the experience from the pilot project, Das said a nationwide launch of the ULI will be done in due course. "Just like UPI transformed the payments ecosystem, we expect that ULI will play a similar role in transforming the lending space in India. The 'new trinity' of JAM-UPI-ULI will be a revolutionary step forward in India's digital infrastructure journey," he said. On artificial intelligence (AI) and DPI, Das said for customers, AI enables hyper-personalised products and faster, more relevant services, while for financial institutions like lenders there are benefits from advanced tools for risk and fraud management, streamlined operations, and reduced compliance costs. "Such advancements, however, come with serious challenges. Data privacy concerns arise from handling vast volumes of personal information. Ethical AI governance is essential to ensure fairness and prevention of bias," he said. He further said AI technology can also be misused to spread misinformation, potentially causing severe damage and disruption to DPIs as well as other digital systems. They can also damage the reputation and operations of financial institutions. "AI promises to make processes simpler and efficient. It can also emulate decision-making to a great extent. However, when it comes to the regulated financial institutions, there should be careful adoption of AI in critical decision-making segments, for example in loan sanctioning," Das said. Das also said with the emergence of fast payment systems across countries and experimentation around central bank digital currency (CBDC), new possibilities are opening up to bring in greater efficiency to cross-border payments. Maximum efficiency gains in such initiatives would come from ensuring interoperability as a key design element, the Governor said.
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RBI constantly working on devising policies to make financial sector stronger, nimble: Shaktikanta Das
Reserve Bank Governor Shaktikanta Das on Monday said the central bank was constantly working on devising policies, systems, and platforms that will make the financial sector stronger, nimble and customer-centric. In a keynote address at the Global Conference on Digital Public Infrastructure and Emerging Technologies, a part of RBI@90 initiative here, Das said Digital Public Infrastructure (DPI) and emerging technologies will shape the future journey of almost all economies of the world. DPI broadly refers to the basic technology systems created mainly in the public sector that are openly available to users and also to other developers. Das said that over the last decade, the traditional banking system had undergone an unprecedented technological transformation. By all indications, this process is likely to become even more intense in the coming years, he said. On the country's experience in DPI, he said, "DPI has enabled India to achieve in less than a decade levels of financial inclusion that would have otherwise taken several decades or even more". Referring to last year's pilot launch of a technology platform which enables frictionless credit, Das said the RBI proposes to name it 'Unified Lending Interface' (ULI). He said the ULI platform facilitates seamless flow of digital information, including land records of various States from multiple data service providers to lenders. "... based on our experience from the pilot project, a nationwide launch of the ULI will be done in due course," Governor Das said. He also emphasised that the UPI system has the potential to evolve into a cheaper and quicker alternative to available channels of cross-border remittances. The Governor also stressed that financial institutions should be abundantly mindful of risks associated with Artificial Intelligence. SHARE Copy linkEmailFacebookTwitterTelegramLinkedInWhatsAppRedditPublished on August 26, 2024
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Reserve Bank of India Governor Shaktikanta Das highlights the central bank's continuous efforts to enhance India's financial sector through policy measures and technological platforms.
Reserve Bank of India (RBI) Governor Shaktikanta Das has emphasized the central bank's ongoing efforts to bolster India's financial system. Speaking at the Bank of Baroda's Annual Banking Conference, Das highlighted the RBI's commitment to developing policies and platforms that enhance the robustness and agility of the country's financial sector 1.
Das pointed out the significant role of technology in transforming the banking landscape. He noted that the RBI has been at the forefront of introducing innovative platforms such as the Unified Payments Interface (UPI), which has revolutionized digital payments in India. The central bank's focus on technological integration aims to improve efficiency and accessibility in financial services 2.
The RBI Governor stressed the importance of a robust regulatory framework in maintaining financial stability. He outlined how the central bank is continuously refining its policies to address emerging challenges and opportunities in the financial sector. These measures are designed to enhance the resilience of banks and financial institutions while promoting innovation 1.
Das highlighted the RBI's commitment to financial inclusion, emphasizing how technological advancements and policy initiatives are being leveraged to bring more citizens into the formal financial system. This approach aligns with the government's broader economic goals and contributes to the overall strengthening of India's financial architecture 2.
The Governor also touched upon the RBI's role in navigating global economic uncertainties. He emphasized the need for a nimble and adaptive financial system that can withstand external shocks while supporting domestic economic growth. The central bank's policies are aimed at maintaining a balance between stability and growth in the face of global economic headwinds 1.
Looking ahead, Das expressed confidence in the Indian financial sector's ability to meet future challenges. He reiterated the RBI's commitment to continuous improvement and innovation in its regulatory approach, ensuring that India's financial system remains strong, resilient, and capable of supporting the country's economic aspirations 2.
The Reserve Bank of India (RBI) is set to introduce a Unified Lending Interface (ULI), aiming to revolutionize the lending process in India. This UPI-like platform promises to streamline credit access for various sectors, including agriculture and MSMEs.
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Reserve Bank of India (RBI) Deputy Governor M Rajeshwar Rao highlights the critical role of responsible lending practices in maintaining financial stability and promoting sustainable economic growth.
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The evolution of banking technology from a disruptive force to an essential service, highlighting the normalization of digital banking and its impact on the financial sector.
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The Economic Survey 2023-24 emphasizes the crucial role of fintech in India's financial inclusion goals while calling for enhanced regulatory measures to address emerging challenges in the sector.
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Axis Bank's Managing Director emphasizes the importance of collaboration between traditional banks and fintech companies to stay competitive in the evolving financial landscape.
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