RBI Governor Urges Banks To Increase Investments Into IT Systems And Technology
Reserve Bank of India governor Shaktikanta Das has urged banks and financial institutions in the country to increase investments into their IT systems and technology. His comments came in response to recent instances of system outages and lapses in providing digital banking services by major banks like HDFC Bank Ltd and State Bank of India.
“There is a need for all banks and all financial entities to invest more in their IT systems and their technology,” said Das, speaking a press conference on Friday. In the coming years, he said, technology and robust IT systems will be key to remaining competitive in the financial landscape, as it is increasingly becoming IT dependent.
“If you do want to remain competitive in the coming years, technology is the key, robustness of your IT systems is the key. So, banks, NBFCs (non-banking financial companies) and other financial entities need to invest more in their IT systems, need to invest more in their technology and strengthen all their their systems so that public confidence is maintained,” he said.
On Dec. 3, the banking regulator imposed temporary restrictions on all digital banking launches and sourcing of new credit card customers, for country’s largest private lender HDFC Bank Ltd that has been facing a series of technical glitches over the last two years.
“In the case of the HDFC bank there were earlier episodes also, and HDFC Bank has an overwhelming presence in the digital payment and internet banking segment, so we have some concerns about certain deficiencies,” said Das.
Therefore we felt that it Is required and it is necessary that the HDFC Bank strengthens its IT systems before expanding further, he said.
We cannot put lakhs of customers who are using digital banking into any kind of difficulty for hours together, and especially when we are ourselves giving so much of emphasis on digital banking, the public confidence in digital banking has to be maintained... I am quite sure that the HDFC Bank management will take necessary action.Shaktikanta Das, RBI Governor
Soon after the announcement of RBI’s stricture on HDFC Bank’s digital business on Friday, India’s largest lender State Bank of India (SBI) informed customers, through its official Twitter handle, that the bank’s mobile banking application YONO was facing technical glitches due to a system outage. “With regards to SBI, it has happened yesterday, our teams are studying it and it is too early for me to comment on that,” said Das.
Commenting on the issue of frequent system outages, Das said, that while the central bank is constantly engaged with the managements of various banks and NBFCs, and works with them to improve their systems, in certain situations it has to take an action.
“ We are constantly engaged with the managements of various banks and NBFCs, where we see deficiencies in their systems and procedures,” he said. “...but in certain situations, certain actions become unavoidable and inevitable and as the regulator and custodian of the digital payment segment in the country, I think the central bank also has to act and that’s precisely what we have done.”