The Deputy Governor added that the RBI recognises the crucial role of fintechs in achieving greater financial inclusion, cost efficiency, and time efficiency. These innovations are driven by three key elements: time (speeding up transactions), access (reaching underserved populations), and data (leveraging available data for new processes). The delivery of financial products has changed significantly through innovative channels, speed, and pricing.

Highlighting the fact that the financial sector is heavily regulated across the globe, he stated that fintechs would also be subject to regulatory oversight to ensure stability and consumer protection. He further added that the RBI has taken various steps to foster innovation, including guidelines for Account Aggregators (AAs) and regulations for Peer-to-Peer (P2P) lending. The RBI’s Innovation Hub and Regulatory Sandbox have been set up to support the development of an innovation ecosystem.

The Deputy Governor further urged the fintech industry to prioritise responsible and scalable innovations that address real-life challenges. Customer protection, cybersecurity, financial integrity, data protection, and compliance should be at the forefront of fintech companies’ strategies for long-term sustainability. He concluded by emphasising the importance of open and meaningful dialogue between regulators, the fintech industry, and established institutions to create a conducive environment for fintech innovation and effective regulation.

Shri Rao highlighted that central banks play a vital role in managing climate-related risks. They need to measure the amount of exposure to climate events and identify vulnerabilities in the financial system. Proper disclosure of carbon intensity data and stress testing will aid in planning the transition. International cooperation is crucial since climate risks transcend geographical boundaries and sectoral segmentations.

Shri Rao also emphasised that Central banks can incentivise green finance and support sustainable development by incorporating climate-related risks into their supervisory frameworks. RBI too has taken various policy measures to promote green finance, including prioritising renewable energy projects in banks’ portfolios and supporting sovereign green bonds. It has also issued instructions on Green Deposits and is working on a disclosure framework and guidance on Climate Scenario Analysis and Stress Testing.

In conclusion, he stressed that dealing with climate change is a long-term endeavour that requires timely, planned and coordinated efforts for sustainable outcomes.

The 3rd G20 Finance Ministers and Central Bank Governors (FMCBG) meeting, chaired by Union Minister of Finance and Corporate Affairs Smt Nirmala Sitharaman and RBI Governor Shri Shaktikanta Das, took place in Gandhinagar, Gujarat, under the Indian Presidency’s theme of ‘One Earth, One Family, One Future’. The meeting saw attendance of over 500 delegates, including representatives from G20 member countries, invitee countries, and international organisations.

The G20 Ministers and Governors pledged to prioritise people’s well-being and the planet, aiming to enhance international economic cooperation and promote global development for all. They focused on Strong, Sustainable, Balanced, and Inclusive Growth (SSBIG) to strengthen the global economy. The meeting covered five thematic sessions: Global Economy and Global Health, Sustainable Finance and Infrastructure, International Financial Architecture, International Taxation, and Financial Sector & Financial Inclusion.

During the meeting, members discussed the global economic outlook, macroeconomic implications of climate change, as well as food and energy insecurity. They endorsed the ‘G20 Report on Macroeconomic Risks Stemming from Climate Change and Transition Pathways.’

The strengthening of Multilateral Development Banks (MDBs) to address 21st-century challenges was identified as a key priority. Members appreciated the efforts of the G20 Independent Expert Group on Strengthening MDBs and endorsed a ‘Roadmap for Implementation of Recommendations of the G20 Independent Review of MDBs’ Capital Adequacy Frameworks (CAF)’ to unlock more lending resources in MDBs. Managing global debt vulnerabilities, particularly in the Global South, was another crucial area of focus. Members welcomed progress made under the Common Framework and emphasised timely resolution of ongoing debt treatment cases.

The Indian Presidency brought the Digital Public Infrastructure (DPI) agenda to the forefront. DPI’s transformative role in advancing financial inclusion and productivity gains was acknowledged, and policy recommendations for leveraging DPI were endorsed. Further, the Indian Presidency submitted a “Presidency Note” laying down important inputs for a Roadmap on crypto assets. The IMF-FSB Synthesis Paper, which comprises this Roadmap on crypto assets, is likely to be completed and submitted before the Leaders’ Summit in September 2023.

Climate finance discussions and recommendations for supporting climate finance mechanisms were prioritised. In addition, the meeting covered pandemic prevention, preparedness, and response through enhanced collaboration between the Finance and Health Ministries. A spotlight was put on infrastructure financing for sustainable cities, and members supported the principles designed to encourage alternative financing and public-private collaboration.

Progress on international tax packages and efforts to enhance tax transparency were appreciated. The meeting also addressed combating tax evasion, corruption, and money laundering, stressing the need for greater cooperation both domestically and internationally. It concluded by drawing inspiration from Mahatma Gandhi’s teachings – of a future where every nation thrives, prosperity is widely shared, and humanity and the planet are harmoniously intertwined.

This arrangement will lead to the development of an INR-AED foreign exchange market and promote investments and remittances between the two countries. Using local currencies will optimise transaction costs and settlement times, benefiting remittances from Indians residing in the UAE.

The second MoU emphasises cooperation in payment and messaging systems. It involves linking the Fast Payment Systems (Unified Payments Interface – UPI in India and Instant Payment Platform – IPP in UAE), as well as the respective Card Switches (RuPay switch and UAESWITCH). Additionally, the MoU explores connecting the messaging systems (Structured Financial Messaging System – SFMS in India and the UAE’s messaging system). These linkages aim to enable fast, safe, and cost-effective cross-border funds transfers, mutual acceptance of domestic cards, and bilateral financial messaging between the two countries.

Overall, these MoUs are a significant step towards enhancing economic cooperation and facilitating seamless cross-border transactions between India and the UAE. By promoting the use of local currencies and improving payment systems’ interoperability, the two countries aim to strengthen their economic ties and foster greater financial collaboration.

There will be a total of seven award categories, and 16 winners will be announced at SFF 2023, which will be held from 15th to 17th November. This year, the Awards will introduce new thematic categories in Artificial Intelligence and ESG FinTech. The nomination process for the awards will be hosted on API Exchange (APIX), the world’s first cross-border, open-architecture API marketplace and sandbox that promotes fintech innovation and collaboration. APIX allows Financial Institutions (FIs) to discover innovative digital solutions from fintechs and rapidly experiment and deploy these solutions. The platform has been supporting the Global FinTech awards since 2020.

In the rapidly evolving landscape of banking and finance, ensuring the security and integrity of financial transactions has become paramount. As technological advancements continue to shape the industry, so do the tactics employed by fraudsters. In response, banks are increasingly turning to Artificial Intelligence (AI) and Machine Learning (ML) algorithms to fortify their fraud prevention measures.

AI-driven solutions have demonstrated unparalleled efficacy in detecting and mitigating fraudulent activities, making them a game-changer in the battle against financial crimes. ML, a subset of AI, enables systems to learn from data and improve performance over time without explicit programming. These capabilities lend themselves perfectly to fraud prevention in the banking sector, where timely and precise detection of suspicious activities is crucial. The sector generates enormous volumes of transactional data daily. AI-powered fraud prevention systems can analyse these vast amounts of structured and unstructured data, identifying patterns and anomalies that are indicative of fraudulent behaviour.

AI can leverage behavioural biometrics to provide an added layer of security. By analysing user behaviour, such as typing speed, mouse movements, and navigation patterns, AI systems can create unique user profiles without needing PII data. Any deviations from these profiles can raise red flags for potential fraud, enabling banks to take immediate action to protect their customers and assets. ML algorithms can predict potential fraud based on historical data and trends, while AI-driven models can anticipate emerging patterns of fraudulent behaviour. This allows banks to take proactive preemptive measures to safeguard their systems and customers.

Source: Penta Security

AI can assign risk scores to transactions in real-time, evaluating the likelihood of fraud. By combining transactional data with customer behavior data and historical fraud data, AI algorithms can swiftly calculate risk scores, enabling banks to make instant decisions on whether to approve, decline, or flag transactions for further scrutiny. This instantaneous response is essential in preventing losses and ensuring a seamless customer experience.

Since AI-powered systems continuously update their knowledge base with new data, they can recognise and adapt to evolving fraud patterns. Traditional rule-based systems may struggle to keep up with emerging threats, but AI’s self-learning capabilities allow it to stay ahead of fraudsters by identifying new attack vectors and adjusting detection algorithms accordingly. With its ability to accurately identify suspicious behaviour, AI can also significantly reduce false positives, streamlining the authentication process and enhancing the overall customer experience. However, AI algorithms must be continually monitored and fine-tuned to ensure they remain effective.

The Reserve Bank of India (RBI) Innovation Pavilion showcased the revamped journeys of our initiatives – the Digital Cattle Loan and the Digital Kisan Credit Card. Demonstrating ‘Frictionless Credit,’ these digital solutions positively impacted lives at ground zero, sparking discussions on financial innovation. It was an honour to present our solutions to dignitaries & central bankers from around the world and represent RBI’s commitment to progress and financial innovation on a global platform.

We had the honour of hosting national and international delegates at our headquarters during the Responsible Finance Forum in Bengaluru. Through candid discussions with the RBIH team, the delegates gained valuable insights into our work and initiatives. Together, we are shaping the future of responsible finance!

The Reserve Bank Innovation Hub, along with CIIE.CO, IIM Ahmedabad as an implementing partner and HDFC Bank as a banking partner, launched Swanari TechSprint 2023 — a platform to conceptualise, develop and support innovations in technology that enhance access, usage and quality of financial services for all women in India.

This edition’s problem statement is as follows: End-to-End Digital Straight Through Process (STP) lending for micro to medium-sized women owned enterprises

The winners of the TechSprint will get access to a potential paid Proof-of-concept with HDFC bank, an opportunity to pitch for pre-seed investment to CIIE.CO (INR 50 lacs) and visibility via CIIE.CO & RBIH social media handles among other benefits.