RBI Governor Advises Banks' IT Investments To Be In Line With Growth

Banks must ensure investments in their information technology infrastructure is aligning well with their business growth, Reserve Bank of India Governor Shaktikanta Das said in his post-policy media briefing on Friday.

"It is necessary that IT systems, in terms of capacity for processing data, keeps pace with business growth," Das said, while clarifying that the decision on the extent of IT investments lies with the bank.

In case, RBI identifies any deficiencies in the IT systems, the central bank advises the bank to take necessary corrective action, Das said. Disaster recovery centres are required to stay active at all times, he said.

This comes after RBI, on April 24, barred Kotak Mahindra Bank Ltd. from onboarding new customers on its online and mobile banking channels, and issuing fresh credit cards due to supervisory concerns over its technology platforms.

RBI imposed strictures on the bank to "prevent any possible prolonged outage" that could "seriously impact not only the bank’s ability to render efficient customer service but also the financial ecosystem of digital banking and payment systems", the RBI had said in its press release dated April 24.

Most banks spend about 7-8% of their operating expenses towards technology and IT infrastructure, officials from several banks disclosed during post-earnings media briefings for the January-March quarter.

RBI's Cybersecurity and Information Technology Examination team is vigilant of system outages and glitches reported by banks, the governor said. "RBI is very alert on these issues; we monitor it carefully and take quick actions," he said, while clarifying that whenever there is an outage, the issue lies with IT systems at banks and not UPI as a product.

To a reporter's question about a technical glitch reported on Tuesday, when mutual fund investors were unable to make payments through the Unified Payment Interface, RBI Deputy Governor, T Rabi Sanka,r said that the central bank is working towards reducing downtime in UPI channel for the last few years.

"The purpose of UPI Lite wallet is to minimise pressure on banks' IT system," Sankar said. "We are seeing 10 million transactions per month on UPI Lite, and as the popularity of UPI Lite increases, we would see the strain on banks coming down," he said.

Deputy Governor Swaminathan J also mentioned a portal where all lenders under the purview of RBI are required to report any planned and unplanned system outages.

"At a system level, we are seeing an encouraging trend. However, if there are any outlier entities, we talk to them on a bilateral basis and issue a corrective action plan to augment their infrastructure, proportionate to growth in business level," he said.