Reserve Bank of India (RBI) Governor Shaktikanta Das emphasized the need for strategic upskilling and reskilling in India’s financial sector as digitalization reshapes the industry. In the RBI’s Report on Currency and Finance for FY24, Das highlighted the challenges and risks associated with this transformation, including cybersecurity threats, data privacy issues, and emerging complex products.
Das noted that digitalization introduces risks such as cybersecurity vulnerabilities, data breaches, and the proliferation of fraudulent apps and misleading practices. He stressed that these developments necessitate significant investments in human resources to address the sector’s evolving needs. The increased interconnectedness of financial systems could lead to systemic risks, and new technologies may bring unfamiliar products and business models that could be exploited by malicious entities.
Balancing financial stability, customer protection, and competition remains a critical challenge for regulators, Das said. The RBI report reveals that India has seen a notable 16.8% increase in AI talent recruitment, reflecting a shift towards digital-intensive roles. Das also underscored the importance of enhancing regulatory and supervisory frameworks to effectively manage digital complexities while fostering innovation within a secure and trustworthy environment.
India’s leadership in the global digital revolution is attributed to its robust digital infrastructure, evolving institutional frameworks, and a tech-savvy population. However, the report also points out that digitalization could pose financial stability concerns due to cybersecurity threats and rapid information dissemination. In 2023, the average cost of data breaches in India rose to $2.18 million, a 28% increase from 2020, although this figure is lower than the global average of $4.45 million.
Das highlighted the benefits of digitalization, including improved access to financial services, more efficient direct benefit transfers (DBTs), and a revolution in retail credit. DBTs have streamlined subsidies, saving an estimated ₹3.4 trillion since their inception. The digitalization of retail credit, through partnerships with fintechs and Big Tech companies, has enhanced market efficiency and integration.
Das concluded that the RBI’s efforts in internationalizing home-grown payment modes and establishing cross-border payment networks are advancing India’s digital public infrastructure as a global public good.
