look news india
New Delhi: While the widespread adoption of digital payments has ensured faster and lower-cost transactions and easier withdrawals through banking and mobile apps, it has also increased risks to operational stability, Reserve Bank of India Deputy Governor Swaminathan Janakiraman said, adding that there is a need to increase investments in IT systems and technology to ensure smooth operations during peak periods.
24-hour online and mobile banking services pose a risk of increased vulnerabilities. This stress can increase the risk of more people withdrawing money simultaneously, leading to a cash shortage.
This is because customers can withdraw money anytime, anywhere without the need to visit a bank branch, in addition to traditional banking facilities. Also, such activities can gain momentum due to digital means of influencing people like social media.
Interestingly, just last month, the Reserve Bank proposed to tighten the rules related to liquidity coverage ratio. In view of the increasing number of mobile banking and internet banking users, the Reserve Bank has increased the run-off factor for retail deposits.
The regulator has provided an additional run-off factor of 5 per cent in case of retail deposits, fixed and semi-fixed, which provide mobile and internet banking services. Runoff occurs when individuals or businessmen withdraw their deposits, which banks do not anticipate in advance.
The Reserve Bank said that while the increasing use of technology has facilitated seamless bank transfers and withdrawals, it has also increased risks, which require active management.
