The Reserve Bank of India’s plans to have access to banking data online from the industry is being stymied by state-owned banks’ reluctance to use technology that they have already deployed. An angry RBI has told public sector banks that they have failed in their business process re-engineering efforts after spending millions on a centralised information technology system. The central bank has berated PSBs thus after observing that they continue to deploy staff to manually crunch numbers for submission of returns to the regulator.
Given the circumstances, RBI has said it will come out with a road-map, giving banks a deadline for compliance. RBI’s own plans to use IT to supervise banks better and generate more frequent data hinges on banks’ adoption of technology. RBI plans to introduce a new system using XBRL (Extensible Business Reporting Language) which allows its computers to communicate directly with the servers in banks and pull out the required information. However, this is not effective if banks resort to manual intervention to transfer data.
In the last decade, banks have spent thousands of crores in putting in place a core banking solution (CBS) — a customised IT package that stores account-holder information in a central server allowing customers to transact from anywhere at anytime.
RBI had expected that with CBS in place, banks would implement straight through processing, wherein, data is generated without manual intervention, leading to integrity and reliability of the data. This would also free back offices staff and result in improved customer service.
In a communication to chief executives of public sector and old private banks, RBI has said: “It is observed that the expected process re-engineering, so very essential to leverage reduced manpower for business growth and increase profitability to derive optimal benefits of technology upgradation, has not happened as desired.”
The country’s largest bank, the State Bank of India, has spent close to Rs 2,300 core on technology in the last five years, while Punjab National Bank spent Rs 1,000 crore on CBS and Canara Bank spent about Rs 400 crore. As of now, almost all PSU and private banks have connected all their branches under the CBS platform and many banks are implementing the BPR model.
RBI has also told banks that returns that are to be filed with the regulator should be generated automatically through the management information system (MIS) server without any manual intervention. RBI has also asked banks to report the extent to which they are generating data manually.
The central bank has asked banks to provide details of the CBS system, its MIS and centralised capabilities. RBI also wants to know if the data flows from the transaction server to the MIS server seamlessly without any manual intervention. RBI also wants to know if banks are also able to implement BPR as per CBS programme or whether they are facing any legacy issues.
