News
RBI Governor Das warns against technology-led disruptions in financial system | Financial News
Financial stability matrix at its best, the challenge is to improve, says Das
Mumbai: Reserve Bank of India Governor Shaktikanta Das speaks during the 188th AGM of the Bombay Chamber of Commerce and Industry in Mumbai, Tuesday, June 25, 2024. (Photo: PTI)Manojit Saha Bombay
While the Indian economy is displaying strength and resilience amid global headwinds, the Reserve Bank of India (RBI) is mindful of emerging risks, central bank governor Shaktikanta Das said and warned against disruptions in the financial system arising from new technologies.
Das said the financial stability matrix is perhaps at its best, but the real challenge is to maintain it and improve it further.
Click here to connect with us on WhatsApp
“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 to the June edition of the Financial Stability Report, released on Thursday.
“This requires all stakeholders to not only invest appropriately to make the most of technological advances, but also take measures to safeguard the security and soundness of their systems,” he said.
Noting that stress tests have shown that capital levels of banks and non-banking financial companies (NBFCs) will remain above the regulatory minimum even in severe stress scenarios, Das said that even in this stable environment, the regulator is keeping a close eye on emerging risks, including those from cyber risks, climate change and global spillovers.
At a time when the global financial system is facing major risks that include alarming levels of public debt, widening asset valuations, increasing economic and financial fragmentation; and frequent geopolitical conflicts, the Indian economy is demonstrating strength and resilience, with strong fundamentals and macroeconomic buffers, he said.
“Economic activity is expanding at a steady pace, with the financial system being stronger and more vibrant than it was before the start of the recent period of crises,” he said.
Das stressed that it was important to consolidate gains and nurture a financial system that is future-proof and supports the needs of India’s growing economy.
“Furthermore, as India’s contribution to global growth increases, our financial system must also modernize and deepen as it prepares to become more global,” he said.
He said efforts should be made to develop an ecosystem that puts customer interests first.
“Ultimately, preserving customer trust is the cornerstone of safeguarding systemic stability,” Das added.