 "RBI Governor Das for reskilling, upskilling amid digitalisation push")
Digitisation is revolutionising traditional finance and improving access to affordable services, yet it also poses human-resource challenges that necessitate strategic skilling and reskilling, said Reserve Bank of India Governor Shaktikanta Das in the 2023-24 Currency and Finance Report.
“...digitalisation presents challenges related to cybersecurity, data privacy, data bias, vendor and third-party risks, and customer protection. Increased inter-connectedness may lead to systemic risks. Additionally, emerging technologies can introduce complex products and business models with risks that users may not fully understand, including the proliferation of fraudulent apps and mis-selling through dark patterns. Digitalisation may induce human resource challenges in the financial sector, necessitating strategic investments in upskilling and reskilling,” Das said.
According to Das, in the rapidly evolving technology landscape, balancing financial stability, customer protection, and competition will remain the key policy challenge.
The regulatory and supervisory frameworks must scale up and become more sophisticated to navigate these complexities and future-proof the financial system, he said, adding that the goal was to balance effective regulation with fostering financial innovations in a safe, robust, and trustworthy ecosystem.
Das said India was leading the global digital revolution, emerging as a frontrunner on the back of its robust digital public infrastructure, rapidly evolving institutional arrangements, and a growing tech-savvy population. Globally, India ranks first in biometric-based identification (Aadhaar) and real-time payments volume; second in the number of telecom subscribers; and third in terms of the startup ecosystem.
India’s flagship payment platform — Unified Payments Interface — is “making transactions faster and more convenient”, Das said, adding that in the digital currency arena, the RBI was at the forefront with pilot runs of the e-rupee and the central bank digital currency.
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The adoption of technology in the financial sector, Das said, is paving the way for next-generation banking, improving access to financial services at an affordable cost, and enhancing the impact of direct benefit transfer by effectively targeting beneficiaries in a cost-efficient manner.
Currently, retail loans are being enabled by online payments and innovative credit assessment models with instant disbursements, and e-commerce is being boosted through embedded finance. Fintechs are partnering banks and non-banking financial companies as lending service providers, and are operating platforms that facilitate digital credit. Additionally, Big Tech is supporting payment apps and lending products as third-party service providers.
“All these innovations are making financial markets more efficient and integrated,” Das said.
Additionally, Das noted the RBI’s initiatives on internationalising home-grown payment modes, cross-border fast-payment network linkages and knowledge and experience sharing with peers were energising the transformation of its digital public infrastructure as a global public good.
To promote healthy growth in the rapidly evolving digital landscape, the RBI has implemented measures such as giving guidelines on account aggregators, peer-to-peer lending, digital lending, a regulatory sandbox, the Reserve Bank Innovation Hub, a framework for self-regulatory organisations, and an enhanced supervisory approach that is thematic and activity-based rather than being solely entity-focused, Das said, adding that the RBI was also cultivating a strong risk culture centred on customer focus, governance, and business conduct to ensure a sustainable and resilient financial sector.