SDG 8: Decent Work and Economic Growth | SDG 9: Industry, Innovation, and Infrastructure
Institutions: Reserve Bank of India (RBI)
Shri Swaminathan J, Deputy Governor of the Reserve Bank of India (RBI), delivered a speech emphasising the need for the banking system to combine the innovation and energy of T20 cricket (quick scores, agility) with the patience, discipline, and resilience of Test cricket (long innings, prudence). He noted that the future success of banking in India depends on the synergy across the entire ecosystem—including banks, fintechs, and regulators. The Deputy Governor framed his key ideas as “six deliveries in an over,” urging the industry to navigate complexity arising from new forces like geopolitical developments, climate risks, and cyber threats.
The six core themes are (6 “Balls”):
Risk Management: Traditional risks (credit, market, liquidity) have become more complex due to market depth and interconnectedness. New risks, including climate-related risks and cyber threats, require risk management and governance to be central to corporate strategy.
Customer Service: Digital tools must uphold human expectations: fairness, transparency, suitability, and prompt, fair resolution when issues arise. Product design must ensure inclusion for the less tech-savvy.
Fintech Collaboration: The focus should not be on competition, but on structuring partnerships where the strengths of each are combined. Banks bring trust, balance sheet strength, and risk management experience, while fintechs bring agility and fresh ideas.
Grievance Redressal: Customer centricity is tested most when things go wrong. Banks must invest in systems to detect and prevent cyber fraud (e.g., strengthening authentication and coordinating efforts against mule accounts), ensuring the customer feels the bank “stood by them”.
Data & Analytics: Data use must be responsible, respecting privacy and building customer confidence. Models and algorithms used for underwriting and detecting stress must be explainable to the Board, and their outcomes monitored for fairness and unintended exclusion.
IT Resilience: As operations digitize, dependence on third parties increases concentration risk. Banks must focus on the crucial ability to detect, contain, and recover quickly from IT incidents.
The common thread across all themes is the central importance of governance, ethical culture, and people. The financial system must combine the innovation and energy of T20 cricket with the prudence and resilience of Test cricket for long-term stability.
Policy Relevance
The RBI Deputy Governor’s detailed framework underscores that strong governance and culture are foundational to navigating modern digital, climate, and cyber risks. This push for balancing T20-style innovation with Test-cricket prudence is essential for guiding the regulated entities in leveraging India’s Digital Public Infrastructure (DPI) effectively while guaranteeing financial stability and public trust over the long term.
What is IT Resilience and Third-Party Dependencies?→ IT Resilience refers to an institution’s ability to quickly recover critical IT systems and operations after disruptions, such as cyberattacks or outages. Third-Party Dependencies refer to the increasing reliance of banks on external service providers (e.g., cloud platforms, outsourced solutions) for core functions, which increases concentration risk—where an outage at a single provider can affect multiple financial institutions simultaneously.
Relevant Question for Policy Stakeholders: How will the RBI operationalize the monitoring of AI/analytic models to ensure they adhere to the principles of explainability and avoid unintended exclusion or bias?
Follow the full news here: Reading the Pitch: Banking Strategies for a Long Innings