shyamala gopinath : technology in banks – responding to the emerging challenges inaugural address by ms shyamala gopinath, deputy governor of the reserve bank of india, at the cii ’ s banking tech summit 2009, mumbai, 23 march 2009. assistance provided by mr ganesh kumar and mr sujit k. arvind in preparation of the address is gratefully acknowledged. * * * ladies and gentlemen, a very good morning. a central banker addressing an impressive gathering of technology experts on a topic which is their very own – to say the least, is a formidable task. in the current global financial context, though, i may not be surprised if many central banks, as regulators of banking and other financial institutions get more engaged with the technology aspects of the regulated institutions ’ operations. it is not hard to miss the role played by greater technological integration in transforming the image of banking as model centric blackboxes, unrecognizable from the traditional brick - and mortar systems. not surprisingly, the internal audit and financial reporting systems within the banks were not given similar focus probably because effective, real time data analytics requires huge data crunching that involves cost. it may be something to ponder that while a lot of focus is given to using technology to manage client and customer accounts at banks and the trading systems, the same level of sophistication does not extend to internal auditing, accounting and financial reports. in india, the situation of the banks is quite different from the banks overseas particularly in developed markets. indian banks are not facing huge write downs or losses and are still quite well capitalized. there may be a slowdown in credit but that is more a reflection of the broader economic slowdown - the impact of the real sector on the financial sector. in this context, for india the theme of the seminar, which refers to ‘ sustaining the growth momentum ’ is quite apt. globally, the it spends of financial institutions are expected to go down drastically in 2009 - 10. in india, however, this could be an opportune moment for banks to focus on the internal processes and consolidate their it platforms across functionalities to use technology as an effective strategic tool. it is also an opportunity for the technology companies to gear up to meet the demands of the domestic market for new technology as well as expanding existing technologies. the use of technology in india has undergone rapid transformation. the last two decades have witnessed a sea change in the nature of services offered by not only

board's role to provide oversight, asking the right questions and holding the management accountable for executing the bank's strategy within the agreed risk appetite. in this context, it is imperative that the views of the board are clearly articulated and documented in the minutes of the meetings of the board and its various subcommittees. it is said that the'palest ink is better than the best memory '. proper documentation serves as a vital record of the board's deliberations, decisions, and rationale behind those decisions, ensuring transparency and accountability in governance. clear minutes not only provide a historical account of the board's discussions but also serve as a reference for future decision - making, helping to maintain continuity and clarity in governance practices. boards should prioritise proper succession planning for top management. having just one whole time director ( wtd ) can create potential vulnerabilities, especially in times of transition or unforeseen circumstances. without a well - thought - out succession plan, 2 / 5 bis - central bankers'speeches the bank may face leadership gaps that could disrupt operations and affect strategic decision - making. a broader pool of experienced leaders also contributes to better governance and more resilient management structures. we observe that while the sfbs are strengthening their boards by bringing in new directors, some sfbs are yet to ensure the presence of at least two whole time directors. i would request these banks to expeditiously consider appointing more wtds. empowering assurance functions boards should accord due importance to assurance functions, namely, risk management, compliance and internal audit. these functions play a critical role in identifying and mitigating risks, ensuring compliance with laws and regulations as well as safeguarding the organisation's integrity. boards should ensure that heads of assurance functions are positioned appropriately within the organisational hierarchy and granted direct access to the board. dual - hatting, or combining assurance responsibilities with operational or management duties, undermines the independence and objectivity of assurance functions by creating conflicts of interest. therefore, any dual hatting of assurance functions, should be avoided. key risks to reflect upon small finance banks have demonstrated strong growth since their inception, now accounting for 1. 18 percent of total banking assets ( as of march 2024 ). this is a substantial rise from 0. 44 percent in march 2018. the deposit base has grown at a 32 per cent compounded annual growth rate ( cagr ) over the last five years whereas net advances recorded a cagr