Banks are not only facing competition from fintech but also large technology companies that are making a foray into the financial services industry in a big way, RBI Governor also said.
The biggest challenge that the banks face currently is a slowdown in credit growth, said Reserve Bank of India (RBI) Governor Shaktikanta Das at a media event on Monday. The growth in credit has moderated to 7-7.5 per cent this year, Shaktikanta Das also said, adding, it needs to improve and the central bank is taking steps in this regard. The slow credit uptake affects the profitability of the banks and therefore, the focus of the banks should be on prudent lending, Shaktikanta Das added.
Sharing his views on the recent progress in resolving bad loan-issue, Shaktikanta Das said that the banking sector is gradually seeing an improvement in the asset quality through increased resolutions via IBC.
Banks are not only facing competition from fintech but also large technology companies that are making a foray into the financial services industry in a big way, RBI Governor also said. “Finance and banking have emerged as engines of global economic growth. It is argued, and in my opinion rightly so, that technology has played a pivotal role in the proliferation of financial services1. Cheques, wire transfers, ATMs and credit cards were important innovations of such nature. Fast forward to more recent times, it seems that we are already witnessing yet another paradigm shift in banking on the back of a technological revolution that promises better customer experience, risk management and returns to shareholders2. Given this environment, it becomes extremely important to understand what it entails for the banking sector and how we can prepare ourselves for the times ahead”, he added.