The Reserve Bank of India (RBI) Deputy Governor Swaminathan Janakiraman stated yesterday that Indian commercial banks are not using their whole IT budget, citing recent events when several clients were inconvenienced by unplanned outages.
Speaking at the SBI Economic Conclave, he also issued a warning to banks on interest rate risks on their books.
According to Swaminathan, there have been a few instances recently of unplanned outages that have caused inconvenience to multiple consumers. Additionally, it has been noted that many banks have not been adequately allocating the funds designated for the purchase of IT security and system acquisitions.
The Deputy Governor stressed on the need for banks to put in place the necessary resources to upgrade their IT infrastructure in line with their business strategies and to monitor their availability and stability to ensure their continued success. He noted that the banks’ capital adequacy ratio stood at 16.79 per cent as of 30th September, 2023, while the Gross Non-Perfroming Asset (GNPA) was 3.25 per cent, which was a decade low, and the Net Non-Performing Assets (NPAs) were 0.76 per cent.
He also noted that the banks are now more resilient than they were five years ago, and that their profitability has continued to improve with a healthy Return on Assets (ROA) of 1.3 per cent and a Return on Equity (ROE) of 12.5 per cent. He also pointed out that there are no Scheduled Commercial Banks (SCBs) in the PCA framework compared to 2018.
