Reserve Bank of India asks banks to vigilant on fin tech challenges

03/11/2021

Table of Contents

Introduction:

Reserve Bank of India is going to launch a web- based supervisory system that will modify off-site and on-site supervision of modern functions like digital banking, cyber security.

RBI alerted banks to be careful in complying with rules and invest in technologies a at the same time to meet the supervisory challenges as they experiment with new services in the post pandemic world with its governance standards, business model, risk culture, and assurance functions which will decide how well it does in the long run.

Advantages of RBI’s step:

RBI has developed a web-based and an end-to-end workflow automation system for continuous participation with supervised entities. It would have a built-in remediation workflow, time tracking, notifications and alerts, Management Information System reports and dashboards on various functionalities including inspection, compliance and incident reporting for cyber security, etc.

Concern from RBI’s step:

With the development of digital banking it would be an extremely important area of supervisory concern over cyber security.

Solution: To address this concern, the Reserve Bank has developed a model-based framework for assessing cyber risk in banks using various risk indicators, risk incidents.

RBI’s step based on these circumstances:

Fin tech companies are challenging banks with more convenient offerings, better reach and lower cost to customers globally.
Besides, developments in areas artificial intelligence, robotics and chat advisory, digitalization, Distributed Ledger Technology, quant computing, cloud arrangements, data analytics, new ways of remote, though have their benefits but are also generating new risks.
The other major challenges that will need to be addressed are climate change, KYC / AML, cyber security, virtual currencies as well as increasing reliance on outsourcing.

Related Question & Answer:

Q1. Who is the governor of RBI?

Ans. Shaktikanta Das (extended tenure of 3 years recently)

Q2. How many deputy governors in RBI?

Ans. 4 (Names: M.K.Jain, T. Rabi Shankar, M.Rajeshwar Rao and Michael D. Patra)