Financial system: RBI chief Das cautions against tech-led disruptions
Virendra Pandit
New Delhi: Reserve Bank of India (RBI) Governor Shaktikanta Das has said while the Indian economy is exhibiting strength and resilience amid global headwinds, there is also a need for caution against disruptions in the financial system from new technologies.
The matrix of financial stability is perhaps at its best, but the real challenge is to maintain it and improve upon it further, he remarked.
“New technologies offer gains in efficiency and customer experience, but they can also bring with them sudden and widespread disruptions to the financial system,” Das said in the foreword of the June edition of the “Financial Stability Report,” released on Thursday.
“This requires that all stakeholders not only invest adequately to take full advantage of technological advancements but also take steps to safeguard the security and soundness of their systems,” he said.
Observing that stress tests showed capital levels of banks and non-banking financial companies (NBFCs) will remain above the regulatory minimum even under severe stress scenarios, he said even in this stable environment, the RBI is watching the emerging risks, including those from cyber hazards, climate change, and global spillovers.
When the global financial system faces major risks such as alarming levels of public debt, stretched asset valuations, increasing economic and financial fragmentation, and frequent geopolitical conflicts, the Indian economy is exhibiting strength and resilience, with strong macroeconomic fundamentals and buffers, he said.
“Economic activity is expanding at a steady pace, with the financial system being stronger and more vibrant than what it was before the onset of the recent period of crises,” he said.
Das emphasized the importance of consolidating the gains and nurturing a financial system that is future-ready and supports the needs of India’s growing economy.
“Furthermore, as India’s contribution to global growth rises, our financial system must also modernize and deepen as it prepares to go more global,” he said.
He said efforts must be made to develop an ecosystem that puts the interests of the customer at the forefront.
“Ultimately, preserving the trust of the customer is the cornerstone of safeguarding systemic stability,” Das added.
