Reserve Bank of India’s executive director Ajay Choudhary has mooted for the responsible use of technology in the financial sector. He said financial institutions must be responsible and one must not “blindly” try to implement the latest technological breakthroughs as that could be counterproductive in many cases.
“A blind adoption without understanding the biases that the models build with the help of adoption of advanced tech could prove counterproductive in many cases,” Choudhary said addressing the event by industry lobby Assocham on Thursday in Mumbai.
It is also desirable that models should be built over sufficiently large time-series data, he added.
The RBI is focused on adapting newer innovations, he said, adding that newer technologies like artificial intelligence, the Internet of Things, blockchain, quantum computing, big data analytics, and 5G bring a lot of disruptive benefits.
Stating that we need to “ensure that the disruptions are constructive”, Choudhary said the risks posed by them should be well understood and managed.
Addressing the startups, he said the innovations should also be scalable and inter-operable, which would enable scaling up the benefits to the larger ecosystem like India.
“We also need to pay sufficient attention to other critical aspects like cyber-security, data privacy, data storage and how the data is used,” he said, adding customer protection through good governance standards is also essential.
Choudhary said all these things need to be kept in mind keeping the need for long-term sustenance of the interventions, which will be finally adopted.
“The tech innovations make incredible feats possible. There are trade-offs between policy objectives such as fostering innovation on the one hand, which is one of our motives while addressing the challenges related to the robust governance surrounding the tech, market integrity, conduct, customer and investor protection, consultation issues, competition issues, financial exposure and others,” he added.
Addressing the event, M. Rajeshwar Rao, Deputy Governor at RBI also spoke about financial inclusion and inclusive credit.
“Financial inclusion has always been an important policy imperative realising its importance in economic development and social well-being of the populace. We have come a long way in our pursuit for financial inclusion which started with promotion of cooperatives, nationalization of banks, institutionalisation of priority sector lending and lead bank scheme, implementation of BC model and more recently with Pradhan Mantri Jan Dhan Yojana (PMJDY),” he said.
“India as a continental economy with multiple languages and cultures, different and sometimes even difficult terrains, large population and low-income levels need to ensure inclusive growth. The focus is thus not only on opening the bank accounts but also making available a bouquet of financial services – transactions, payments, savings, insurance, and ensure easily accessible and affordable credit to the customers. Inclusive credit will have to be the bed rock of inclusive financial inclusion,” Rao added.
(With PTI inputs)
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