look news india
Private banks have significantly increased their information technology (IT) spend as most of the banking transactions in digital India are now done online. Unlike the one-time capital expenditure before the transformation in core banking, IT is now becoming a recurring cost accounting for up to 10 per cent of operating costs for private banks. It is noteworthy that recently the central bank had imposed some operational restrictions against Kotak Mahindra Bank in IT matters. Private banks were then asked how much they spend on customer and e-transaction security. Private banks said, spending on IT is a continuous process. Once the budget is allocated, it is continuously monitored and improvements are implemented as necessary.
What is recurring cost?
Recurring charge or recurring expense is an expense that is incurred repeatedly and is necessary for ongoing business operations. In which changes are made according to the review.
Due to increasing cases of fraud, RBI has ordered banks to strengthen the system.
IT spending has increased due to central bank concerns. The Reserve Bank of India wants private banks to make the necessary spend on volume, security and backup against frauds, with the result that IT has now become a recurring cost of up to 10 per cent of operating costs for private banks.
ICICI Bank's IT expenditure was 5.6 percent of its total expenditure in 2019, which has increased to 9.4 percent in the current financial year.
IndusInd Bank spends eight to ten percent of its total operating expenses on IT.
Yash Bank's IT spend has increased by 17 per cent to Rs 1,108 crore in FY24, of which about 30 per cent has been spent by the bank on staffing. This includes both operating and depreciation costs.