The Reserve Bank of India will be setting up an information technology subsidiary to improve regulations and supervision, RBI Governor Raghuram Rajan said.

Rajan, however, did not spell out any timeframe. “It is under way. Let’s see when it comes up,” he said at the banking technology excellence awards function at the Institute for Development and Research in Banking Technology (IDRBT), an arm of the apex bank, here on Friday.

Saying that there is huge scope for technology utilisation in banking, he observed that the cost structure in banks was still high.

With increasing use of technology, expenses in banks should come down, but it was not happening. “You can see IT everywhere in banking, except in expenses numbers. My sense is that use of more and more IT should bring down costs,” Rajan said.

The reasons for high costs could be higher expenses related to market structures and human factor in operations. “The nature of branch operations should change,” he said, while asking banks to reengineer business process taking advantage of IT.

Referring to recent initiatives, such as Aadhaar and Jan Dhan, he said: “I hope the Supreme Court will see value in widening Aadhaar.”

A combination of initiatives like Aadhaar, Jan Dhan, electronic transactions, mobile banking, and the new payments banks will provide banking at the doorstep. Proper use of vast information pertaining to customer behaviour pattern and preferences and the issue of cyber security will be the biggest challenges for banks, the Governor said.

He also formally launched the Chief Information Officer (CIO) Forum at IDRBT to look into various aspects of banking technology.

AS Ramasastry, Director, IDRBT, said a new centre for virtualisation and cloud would be set up in the institute soon.

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