RBI’S VISION ON TECHNOLOGY IN THE BANKING SECTOR- Page 2
(Opening address by Mr. G. Padmanabhan, Chief General Manager - in - Charge, Dept. of Information Technology, Reserve Bank of India at the Banknet India's Bank Tech Summit at Taj Lands End, Mumbai on September 22, 2005)
Today’s banking business cannot exist without dependence on IT – mainly because of the need to handle large volumes, the facilities it offers for cost saving , effective delivery channels and for better information based decision making. Recognizing the need for the banks to embrace technology and use IT to a large extent, the Governor of the Reserve Bank, had, in the Annual Policy Statement 2005-06, announced that the Reserve Bank would be bringing out the ` Financial Sector Vision Document – FST Vision` aimed at proving banks with inputs on the approach been taken by Reserve Bank in the implementation of IT for the financial sector. This has since been done and the mission statement in the vision document is IT FOR EFFICENCY AND EXCELLENCE
While the Corporate objective is: “Enabling banks to leverage on IT for better customer service, improved housekeeping and overall systemic efficiency”
Technology implementation in the banking industry has had a chequered history and is the result of many initiatives which were driven by the Reserve Bank in its developmental role. Today, with the coming of the age of the banking industry, the Reserve bank has decided to move away from the prescriptive role (a move which commenced ever since the liberalization process was initiated in the early nineties), to that of the guide. Accordingly, the vision of the RBI in respect of the financial sector, it is hoped, will enable banks to carve out their path towards implementation of the IT based systems at their end, which would synchronies with the plans of the Reserve Bank for the medium term of three to five years.
The role of the RBI is manifold; however, for the purpose of FST Vision, the main areas of the coverage have been limited to the following basic four areas:
IT for regulation and supervision
IT and IDRBT
IT for the financial sector
IT for government related functions
As far as `IT for regulations and supervision` is concerned, the emerging challenges in the form of implementation of standardization across a variety of hybrid systems at different financial entities, need for Decision Support Systems, and the need for technology to facilitate risk based offsite supervision are highlighted.
The path indicated in this area envisages common inter-operable web-based structures for transmission of data relating to the regulatory functions, and the use of a single centralized data base for all information, apart from hiving off the operation of non critical functions by the Reserve bank.
The FST Vision also outlines the vision of the IDRBT, which envisages the institute to be a premier research institute, concentrating on research and development for the banking and financial sector, providing educational \ training facilities and hiving of the business related activities.
For the financial sector, the vision document elucidates the thrust areas of the Reserve Bank, which are:
Providing generic information on various standards and approaches,
Providing for IS Audit and
Requisite focus on Business Continuity Plans.
The vision document proposes specific attention to be devoted percolation of technology efforts to all types of banks and all sections of the customers in the banks with specific reference to the rural areas. One must recognize the tremendous potential of the rural sector of the country. The single substantial of the benefit of nationalization banks was mass banking and the spread of banking to the rural areas. Today, there is a need to ensure that the benefits ushered in by technology embrace the rural sector as well, which has the tremendous potential to sustain the growth of the economy at the large and of banking in particular. It is based on this philosophy that the FST vision targets the need for IT for the rural sector banking, where it is essential to provide solutions and where environmental variables such as absence of stable electric power, absence of intern ate penetration and reluctance by the rural folk to use new technologies are the issues to be tackled and solutions found.
If ITC Ltd. could succeed with the e-choupal initiative, I find no reason why banks – who are the lifeline for India’s villages – cannot succeed in their rural initiative e-initiatives. From the Reserve banks side, we have already supported a ` Multi Application Smart Card Project` which when implemented is accepted to take technology down to the bhajiwali of Jumaritalaya, by providing her with low cost, affordable and secure e-purses!
Outlining the use of IT in the Government sector transactions (which has the largest potential to grow significantly in the years to come), specific attention is drawn to the need for the business process re- engineering, changes to rules and procedures for alignment with e governance, so as to achieve implementable objectives.
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Press Coverage of Banknet India's Bank Tech Summit... Click Here
Banknet India's Bank Tech Summit on 22nd September 2005 was attended by 300 participants from more than 100 banks and IT companies from India, US, UK, Australia, France & Singapore. 20 Prominent Speakers included- Mr. G. Padmanabhan, Chief General Manager - in - Charge, Dept. of Information Technology, RBI, Mr Simen Munter, Chief Operating Officer of HSBC Bank ... Read More