FINANCIAL SYSTEM RISKS
Kotak Mahindra Bank says it has to do more to leverage technology
Kotak Mahindra Bank's new chief emphasizes tech transformation despite RBI ban. Auditors highlight IT system complexities affecting financial reporting. Industry experts link RBI actions to the bank's 811 offering success. The bank shows growth in customer base and financial metrics.
Navigating climate risks: India's financial sector gears up for transparency with RBI's draft guidelines
The introduction of the disclosure framework is a laudable first step, signalling a concerted effort towards addressing climate risks and fostering climate action within the financial sector.
Understanding Smart Contracts: The backbone of secure transactions in DeFi
This article explores DeFi and Ethereum-based smart contracts introduced by Nick Szabo, streamlining lending platforms, DEXs like Uniswap, and tokenized assets. Key features include atomic settlements and composability. Despite efficiencies, risks like the Poly Network hack necessitate security audits. Future advancements involve self-custody, AI integration, and interoperability in structured products.
Not as $trong, but $till $ignificant
Recent reports suggest that Saudi Arabia has shifted away from the US dollar in its oil trade agreements, deviating from the petrodollar system. Though these reports lack concrete evidence, they stir speculation in the global financial system. BRICS nations have also signaled intentions to reduce their dependence on the dollar, advocating the use of local currencies in cross-border transactions among member states.
AI, 3rd-party tech likely to intensify risks of cyberattacks
A major cyber incident in these IT service providers may in turn impact multiple regulated entities simultaneously, causing a cyberattack on a system-wide level. "In the recent past, multiple incidents involving payment and settlement systems have led to significant disruptions in interbank transactions and payment failures," the report stated.
RBI expresses concern over credit growth, says expansion of above 18% may create risk
Retail lending growth slows in Q4 FY24, while bank lending to NBFCs moderates. The share of bank lending to NBFCs decreases, indicating a shift towards balanced credit practices for financial stability.
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Financial sector strong but RBI watchful of emerging risks, says RBI Governor Das
RBI's financial stability report underscores the importance of governance, Basel III norms compliance, and maintaining high CET1 ratios for banks. Monitoring GNPA ratios of public, private, and foreign banks essential for financial system stability and resilience.
RBI cautions against surge in private credit between corporates and non-banks
The Reserve Bank of India (RBI) warns of systemic risks from the rapid growth of private credit, which has quadrupled in the past decade, especially due to its opacity and interconnectedness with banks and non-banks. The RBI highlights potential vulnerabilities in this segment, including the risk of sharp losses during a credit cycle downturn and challenges posed by complex structures and liquidity risks.
Indian banks' gross NPA ratio at multi-year low of 2.8%, net NPA down to 0.6% in FY24: RBI Fin Stability Report
The Reserve Bank of India reported that Indian banks' gross NPA ratio reached a multi-year low of 2.8%, with net NPA at 0.6% by March 2024. The global economy faces risks from geopolitical tensions and high public debt, but India's financial system remains robust, supporting economic growth through sustained credit expansion, the RBI said.
ETtech Deep Dive: How RBI and NPCI are working to tackle mule account frauds
The RBI, the National Payments Corporation of India, and the Ministry of Home Affairs are teaming up with banks, financial institutions, and tech security companies to crack down on mule accounts and prevent fraud in the country's banking system.
RBI to ease compliance burden while fine tuning regulations to address evolving risks
RBI Governor Shaktikanta Das emphasized the importance of strong governance and resilient financial systems at the global conference on financial resilience. Highlighting new guidelines set for release next month, Das noted the need for clear roles and responsibilities for boards and executive management, balancing business growth with robust risk management to ensure long-term success
RBI flags pursuit of growth at cost of risk buildup
India's banking regulator cautioned lenders against pursuing 'mindless' business growth to avoid exposing the financial system to risks. RBI Governor Shaktikanta Das emphasized the importance of balancing business growth with risk management.
RBI's timely action reduced vulnerabilities in unsecured loans: Shaktikanta Das
The Reserve Bank of India (RBI) Governor Shaktikanta Das announced on Thursday that timely actions by the central bank have helped in moderating vulnerabilities related to unsecured loans. This statement was made during the Second Global Conference on Financial Resilience organized by the College of Supervisors.
RBI's proposed digital payments intelligence platform will mitigate frauds, say experts
The Reserve Bank's proposal to establish a digital payments intelligence platform aims to combat fraud and enhance consumer trust. A committee led by A P Hota will assess the creation of this platform, leveraging advanced technologies to mitigate payment fraud risks.
RBI says India's banking sector is sound and resilient, Gross NPA is below 3%
During the Monetary Policy announcement, RBI Governor Shaktikanta Das emphasized India's robust banking system, with gross NPA levels below 3% for scheduled commercial banks and NBFCs as of March 2024. He highlighted factors like improved provisioning, capital adequacy, and profitability, stressing the importance of governance, risk management, and compliance enhancements.
RBI penalties up 88% in 3 yrs; KYC, AML top list
The number of penalties imposed by the Reserve Bank of India on financial institutions grew 88% in the past three years with Know Your Customer (KYC) and Anti Money Laundering (AML) topping the list of non-compliances. The central bank collected ₹78.6 crore over the three years after imposing penalties on 261 occasions in 2023 alone, according to RBI reports compiled by Signzy, a fintech firm that manages regulatory compliance for institutions.
OpenAI, Google DeepMind's current and former employees warn about AI risks
The letter further warns of risks from unregulated AI, ranging from the spread of misinformation to the loss of independent AI systems and the deepening of existing inequalities, which could result in "human extinction."
Sebi forms committee to review ownership, economic structure of clearing corporations
Sebi forms committee chaired by Usha Thorat to review ownership and economic structure of clearing corporations for resilience and neutrality.
Risk weighting slows unsecured loan growth
The growth of unsecured credit in India, including personal loans and credit card outstanding, slowed to 18% in April from 23% in November 2023. The Reserve Bank of India's risk weighting on such exposures aims to reduce delinquencies in the banking system.
Some Indian brokers impose higher trading margins to withstand election volatility
Some large Indian brokerage firms have asked clients to furnish higher margins against trades this week to limit the risk of default ahead of the results of India's national elections, due on Tuesday.
Centre to take decisive steps to strengthen banking system, says Finance Minister
In a post on X, Sitharaman said India's banking sector turned around due to Prime Minister Narendra Modi's strong and decisive leadership, and recently achieved a significant milestone by recording its highest-ever net profit of over ₹3 lakh crore. "During FY 2023-24, public sector banks recorded the highest-ever aggregate net profit of ₹1.41 lakh crore, almost 4 times higher than ₹36,270 crore in FY 2014," she noted, adding that the government has turned banks from being "NPA-laden nightmares" into "pillars of jan kalyan".
'Banks need to look beyond bulk deposits to fund loans': RBI
The Reserve Bank of India (RBI) Thursday said that banks must reduce their reliance on wholesale deposits to fund loans and be watchful of the risks associated with their advances and trading exposures amid interest rate fluctuations.
Reduce reliance on wholesale deposits to fund loans: RBI to banks
The Reserve Bank of India (RBI) advises banks to reduce dependence on wholesale deposits and manage risks from loans and trading amid fluctuating interest rates. Regulatory measures to curb consumer lending and diversify deposit sources are emphasized. The RBI plans to issue new guidelines to enhance financial stability and asset quality in FY25.
Capital and asset quality of banks, NBFCs remain healthy, says RBI in its annual report
The Reserve Bank of India (RBI) released its annual report on Thursday. It highlighted that the capital and asset quality of banks and Non-Banking Financial Companies (NBFCs) have stayed robust. This has fostered growth in bank credit and domestic activity for the financial year 2024.
Banks' credit growth in FY25 to slow down to 14% on lower GDP uptick, RBI measures: Crisil
Crisil forecasts a 2 percentage point drop in the banking system's credit growth to 14% for the fiscal year 2024-25, citing factors such as lower GDP growth, RBI measures like higher risk weights on unsecured loans, and a high base effect. Slower deposit growth is expected to temper credit expansion, though the fundamental drivers of credit demand remain intact. While corporate segment growth is projected to maintain at 13%, retail growth will slow to 16%.
How Jocata is helping financial services industry move from legacy systems to AI-powered solutions
Jocata’s low-code platform is driving the future of enterprise lending and embedded finance, says Prashant Muddu, Managing Director & CEO.
Trading journal is the most underrated risk mitigation technique. Here’s a 5-step guide
The trading journal is an indispensable for enhancing trading skills. It helps to systematically record all trades that enables us to identify the strengths and weaknesses, analyze trades, and create a profitable strategy. Finance Minister Nirmala Sitharaman emphasized the benefits of using a trading journal to enhance trading skills and profitability, highlighting the importance of stability in the financial market to protect investors.
Need proactive risk mitigation measures to tackle cyberattacks: RBI DG
RBI deputy governor Swaminathan J emphasized proactive risk mitigation strategies in the face of cyberattacks and emerging banking risks, addressing challenges in regulations, corporate governance, and assurance functions to ensure bank safety and stakeholder trust.
Constant vigil needed to mitigate risks in financial sector, says RBI Deputy Guv Rao
He said the technological developments and innovations hold great promise for the financial sector as they have immense potential to increase the reach of financial firms, enhance the range of product offerings and conveniences for customers, expand the ambit of finance to hitherto excluded segments.
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