NEWSLINKS
INDIA & THE WTO
NEW GOVERNMENT
COMMENTARY
INTERVIEWS
SPECIALS
CHAT
ARCHIVES
SEARCH REDIFF

Jalan urges banks to embrace hi-tech in Y2K

Our Correspondent in Hyderabad

Reserve Bank of India governor Dr Bimal Jalan called upon the Indian banking sector to observe Year 2000 as the "year of banking technology".

Inaugurating a one-day conference of chairmen and managing directors of public sector banks in Hyderabad on December 7, Jalan said, "The Vasudevan Committee on Technology Upgradation in the Banking Sector is an important landmark in introcuding technology upgradation in banks."

The RBI governor, who preferred to make brief remarks rather than reading the text of his prepared speech, said that "electronic banking or Internet banking" not only offers convenience for the customers but has tremendous implications for productivity and employment generation in the banking sector."

He said that Indian banking was marked by high cost of transactions. However, bringing down the costs required higher volumes of transactions and "technology helps to increase the volumes". He felt that in the interest of productivity, employment and proper management of human resource development, "we need to make a fast move in this area (of technology upgradation). It is an important management tool for all of us."

Earlier, making a presentation on the major recommendations of the committee on technology upgradation in the banking sector, which submitted its report in May 1999, Dr A Vasudevan, RBI Executive Director, said that the Indian Financial Network or INFINET would be the communication backbone of the banking industry.

He said INFINET is a satellite-based wide area network using VSATs. The integration of terrestrial lines for intra-city and smaller cities is also envisaged. The initial coverage will comprise 500 branches and with enhancement of transponder capacity in due course, the coverage can be extended to 5,000 branches.

He said that the committee has set a specific deadline for computerisation of all branches dealing in government transactions. Thus, computerisation of focal point branches and state government link cells is to be completed by March 31, 2000. Besides computerisation of government departments, electronic reporting of government transactions is also envisaged.

In his keynote address, RBI deputy governor Dr S P Talwar said that INFINET helps to improve the payments system. In line with the RBI governor's announcement in April 1999 about the need for introduction of real time gross settlement or RTGS system, the RBI has been working on a number of new initiatives.

Talwar urged the banks to prepare vision documents and lay down strategies that would culminate in virtual banking. The economisation in the transaction costs that could be gained in the process would greatly facilitate macro-economic policy making since this would impact on spreads and profitability, he noted. He urged the banks' top brass to act as harbingers of technological change and promote internationalisation of banking.

Business