The Reserve Bank of India wants banks to improve their risk monitoring capabilities to prevent possible deterioration in asset quality in the current rising interest rate regime.
Dr K. C. Chakrabarty, Deputy Governor, RBI, said that when the economic environment becomes difficult, banks should improve their risk management capabilities. Then they will not face any problem on the credit quality front.
Pointing out that the credit off-take situation was ‘ok', the RBI DG observed that the central bank was watchful about the exposure of banks to all sectors of the economy and not just retail, commercial real estate and infrastructure.
Dr Chakrabarty spoke to the media on Sunday on the sidelines of a Bank of India (BoI) event at Padgha village on the outskirts of Mumbai. He launched the bank's ‘Dhanaadhar' card, and Banking through Mobile (BTM) service. BoI is the first bank to roll out the ATM card product using the ‘Aadhaar' authentication infrastructure.
Bank accounts
Underscoring the fact that only 40 per cent of the population has bank accounts and banks have a presence in only 30,000 out of the six lakh-odd villages, Dr Chakrabarty said technology can now enable banks to reach basic banking services to the hinterland.
Villages with above 2,000 population covered by banking services had increased from 27,743 at end-March 2010 to 53,397 at end-March 2011. Using technology banks are providing services such as savings-cum-overdraft account, a remittance for electronic benefit transfer and other remittances, a recurring or a variable recurring deposit, and entrepreneurial credit.
Inflation will come down if the cost of products and services are brought down by leveraging technology, said the DG. This would lead to a softer interest rate regime which would enable sustainable growth.
Bank of India's Chairman and Managing Director, Mr Alok Misra, said the ‘Dhanaadhar' card can function on multiple channels such as ATM and micro-ATMs. Since it uses ‘Aadhaar' identification, the card can also function as an identity card. The customer's Aadhaar number and photograph are printed on the card.
RuPay
Meanwhile, the National Payments Corporation of India is in talks with a host of banks — regional rural banks, urban co-operative banks and commercial banks — to launch Aadhaar-enabled ATM-cum-debit cards.
“We are a country of 120 crore people. So, it is but right that we have our own retail payments and settlement infrastructure — RuPay. Once all the 82 RRBs are on core banking platform, they will begin issuing RuPay ATM-cum-debit cards. Many urban co-operative banks have expressed their desire to issue these cards. We are also talking to commercial banks to get them to issue RuPay-based cards,” said Mr A. P. Hota, MD and CEO, NPCI.