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RBI’s liquidity management operations are enabled by tech innovation: Das

Digital KCC loans will be launched in the full-fledged manner from CY 2023

RBI’s liquidity management operations are enabled by tech innovation: Das

The introduction of the automated sweep-in and sweep-out (ASISO) facility in the e-Kuber system in August 2020 was a significant technological innovation in the RBI’s liquidity management operations. “Consequently, the banks are now able to set the amount that they wish to keep as balances in their current accounts with the Reserve Bank at the end of the day. Depending upon this pre-set amount, marginal standing facility (MSF) and standing deposit facility (SDF) bids, as warranted, are auto generated,” said Shaktikanta Das, Governor, RBI while speaking at FIBAC 2022 conference.

Strengthening regulatory framework

The RBI has been ahead of the curve in creating an institutional architecture for new financial products and services. Peer to peer (P2P) lending, account aggregator (AA) framework, UPI, Trade Receivables Discounting System (TReDS) and allowing NBFCs to offer credit services over digital only platforms are instances of regulation helping the industry to grow in a systematic manner. Customer-centric initiatives, such as Online Dispute Resolution (ODR), Integrated Ombudsman Scheme, Retail Direct scheme for G-Sec investors, contactless and offline payments, Payments Infrastructure Development Fund (PIDF) framework, card tokenization and e-mandates for recurring transactions have also been introduced in the recent period.

Deepening supervisory framework  

The thrust is now focussed more on identification of root causes of vulnerabilities in financial institutions and taking suitable measures for mitigation. The RBI remains vigilant about unsustainable growth, if any, in financial entities including risks emanating from technological developments. Das explained: “Analytical capabilities are being enhanced by leveraging advanced technologies such as artificial intelligence and machine learning (AI/ML). The data capabilities are also being upgraded. The recent guidelines on digital lending underscore the importance of facilitating responsible financial innovation. Additionally, the challenges relating to cyber risk and climate related financial risks are getting appropriate policy focus.”

‘We will keep Arjuna’s eye on inflation’

Domestic Inflation remains elevated. RBI has refined its inflation forecasting methodology by incorporating new techniques and are delving deep into the granularity of inflation projections. Das pointed out: “In our view, price stability, sustained growth and financial stability need not be mutually exclusive. Our constant endeavor is to keep an Arjuna’s eye on inflation, which is our primary target. We have augmented our baseline quarterly projection model (QPM) with satellite models. We are also exploring techniques spanning new and diverse fields such as data science (DS), machine learning (ML) and night-time luminosity.”

RBI will hold a special meeting of MPC on Thursday to discuss the response to be given to the govt for failing to contain the retail inflation. “The RBI will send its report on this to the government and the details of this letter will be made public sooner than later, further said Das.”

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