Indian banks advised to adopt AI and blockchain for future readiness
The Reserve Bank of India (RBI) recently held a conference exclusively for Indian bank directors, emphasizing the importance of adopting innovative technologies such as Blockchain and Artificial Intelligence (AI).
The conference was led by RBI Deputy Governor Mahesh Kumar Jain, who urged bank directors to embrace these technologies to unlock new growth avenues and enhance stability in the financial landscape.
The conference aimed to encourage the integration of these technologies to ensure sustainable progress and future-proof the banking industry in India.
SBI Governor Addresses The Potential Risks
During the conference, Deputy Governor Mahesh Kumar Jain evaluated the risks involved in sustainable growth and highlighted the importance of effective corporate governance, governance structure, and how to prepare for potential risks.
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Jain emphasized that banks face challenges arising from technological disruption, customer expectations, and cyber threats in the ever-changing environment of today. As such, he advised banks to prioritize technology adoption to tackle these challenges effectively.
Jain also emphasized the importance of technological integration, highlighting it as a key strategy to ensure sustainable growth in the banking sector and mitigate risks.
In his words, “To prepare for the future,” banks need “adopt innovative technologies such as Blockchain and AI,” also investing in cybersecurity measures.
India Embraces Blockchain Innovation
The Reserve Bank of India (RBI) initiated pilot trials for the digital rupee, targeting improved cross-border payments and mitigated arbitrage losses.
RBI’s Central Bank Digital Currency (CBDC) experiments aim to enhance efficiency and foster secure transactions in retail and wholesale sectors.
India Finance Minister, Nirmala Sitharaman, recently said India is not against blockchain technology, but crypto needs monitoring. She further claims that blockchain gives too many options and can be utilized in many different ways.
SItharaman believes the central bank must drive crypto; otherwise, it can fall like those without proper government backing, causing huge spillover effects like FTX.
She highlights the limitations of individual countries’ actions in regulating crypto assets, stating that the interconnectedness of the global order renders such measures ineffective.
As technology transcends boundaries, she emphasizes the need for coordinated efforts in addressing the challenges posed by cryptocurrencies, surpassing geographical borders. India takes a stringent stance on crypto trading, disallowing traders from offsetting losses against gains.
Notably, Sitharaman imposed a 30% flat tax on crypto income last year and a 1% tax deducted at source (TDS) on crypto trades above 10,000 Indian rupees ($122).
Also, there are severe penalties , including penalties equal to TDS for non-deduction and 15% annual interest charges for late payments. Moreover, imprisonment for up to six months is possible, demonstrating a strong regulatory approach.
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