RBI unveils 14 goals for its centenary celebrations in April 2035

The RBI also intends to deepen and universalize digital payment systems by a phased implementation of Central Bank Digital Currency, and internationalise the payment systems.
Reserve Bank of India
Reserve Bank of India (File Photo | PTI)

MUMBAI: From positioning itself as the model central bank of the Global South to capital account liberalization to the globalization of the rupee and reviewing the monetary policy framework, the Reserve Bank, which is in the final decade of its inception to hit the century-mark in 2035, has unveiled a roadmap for the centenary celebrations with 14 aspirational goals.

The monetary authority kicked off the 90th foundation day celebrations on April 1, 2024. The Reserve Bank of India was established on April 1, 1935 as a private stock company by the British but in accordance with the provisions of the Reserve Bank of India Act, 1934. The RBI was initially headquartered in the then Calcutta, and was permanently moved to Bombay in 1937.

The other key goals, aimed at enhancing the country’s footprint across the world, include the deepening financial inclusion, which in the past decade has seen tremendous success not just in its territorial jurisdiction but globally as well; widening the financial inclusion, building safeguards against payment frauds, and addressing the balance between price stability and economic growth from an emerging market economy perspective among others.

“As the Reserve Bank approaches the centenary year, RBI@100, it will gear up even more to remain future-ready for our fast-growing economy,” said Governor Shaktikanta Das said Friday while announcing the review of the monetary policy.

He said the central bank has drawn up strategies for the next decade, which include policy actions to position the RBI as “a model central bank of Global South” and appealed to observers of the economy and financial system to closely examine these action plans.

Global South typically refers to the regions and countries such as India, Brazil, Mexico, China, Latin America, and Africa that are underdeveloped economies or low income economies.

“This is not a static document as we are living in a dynamic world. Our endeavour will be to continually update it as may be required,” Das said.

The RBI@100 roadmap enlists as many as 14 key goals, which are more aspirational in nature and aim at refining the monetary policy communication and address spillovers to emerging markets from private and public debt overhang in systemically important economies.

These goals also include internationalization of the country’s financial sector, more financial sector reforms will be undertaken to expand domestic banking in line with economic growth, and position three to five domestic banks among the top 100 globally in terms of size and operations.

The monetary authority also plans to deepen and modernise financial markets, institutions, and infrastructure, and support the International Financial Services Centres Authority to make Gandhi Nagar Gift City a leading global financial centre.

To safeguard users against payment frauds, the RBI plans to widen and deepen consumer awareness, and make payment systems safer and more secure. It also plans to identify and implement solutions for proactive prevention and quick redressal of fraud complaints.

The RBI also intends to deepen and universalise digital payment systems by a phased implementation of Central Bank Digital Currency (e-Rupee), and internationalise the payment systems-– UPI/RTGS/NEFT; and to make supervision of regulated entities a global model, deepen financial inclusion, expand credit availability, liberalise the capital account, and internationalise the rupee.

Further, the central bank is also planning to set up a financial sector cloud infrastructure, ensuring transformational shifts in data collection, processing and storage, and to develop a secure global financial messaging hub.

One of the key objectives for the roadmap is reviewing the monetary policy framework, which was adopted in 2016, as a flexible inflation targeting framework with the objective to maintain consumer inflation at 4 percent with a tolerance of 2 percent plus or minus. The current inflation framework, adopted following the recommendations of a committee headed by the then deputy governor Urjit Patel, is valid until March 31, 2026.

The framework also mandates the governor to personally write to the government explaining the reasons if inflation has crossed its target for three successive quarters. After the pandemic induced economic boosters and repo cuts, there was excess liquidity in the system which spiked the prices to low double digits.

On the capital account liberalization, the RBI aims to make the rupee available to non-residents to facilitate cross-border transactions, ensure accessibility of rupee accounts to persons resident outside India (PROIs) and also promote domestic corporations/brands become multinationals/global brands through overseas investments.

The Fourteen Centenary Goals

1. Monetary policy and liquidity management

(Positioning the Reserve Bank as the leader of the Global South; review of monetary policy framework to address balancing price stability and economic growth from an emerging market economy perspective, refining monetary policy communication, prevenitng spillovers to EMEs from private and public debt overhang in systemically important economies)

2. Globalisation of our financial sector

(which includes financial sector reforms related to expanding banking domestically in consonance with national growth; positioning 3-5 domestic banks among top 100 global banks in terms of size and operations; deepening and modernizing financial markets infrastructure; and supporting International Financial Services Centres Authority to make Gift City a leading global financial centre)

3. Making Reserve Bank’s Supervision a Global Model

(which includes risk-focused supervision, supervisory culture for effective risk discovery; and ensuring an appropriate compliance culture at supervised entities; building ‘through the cycle’ risk assessment framework by continuous horizon scanning and holistic risk assessment; customer-centric supervision to improve the conduct of financial institutions to protect and promote customer interests through appropriate supervisory focus; effective corrective actions to focus on prudent supervisory judgement and assessing supervisory effectiveness; and creating a data analytics universe)

4. Deepening and Universalisation of Digital Payment Systems– Domestically and Globally

(which will involve internationalisation of UPI/RTGS/NEFT; participation in payment systems linkage projects bilaterally and multilaterally; increasing the domestic usage of digital payments; and phased implementation of e-Rupee)

5. Deepening Financial Inclusion

(by focusing on accessibility, availability and quality of financial services to all sections of the society)

6. Expanding Credit Availability

(By strengthen data collection; comprehensive credit information repository to support credit needs and monitoring; unified loan interface; and reviewing priority sector guidelines to proactively address emerging needs)

7. Capital Account Liberalisation and Internationalisation of the Rupee

(to enable availability of the rupee to non-residents for facilitating cross-border transactions in the rupee; enhancing accessibility of the rupee accounts to persons resident outside India (PROIs); adopting a calibrated approach towards interest-bearing non resident deposits; and promoting domestic multinational corporations to become global brands through overseas investments)

8. Dealing with Climate Change

(Regulatory/supervisory framework for addressing challenges arising from climate change; finalising guidance for regulated entities to stress test their asset portfolio to assess impact of climate change; macro stress-testing the impact of climate change on regulated entities from a financial stability perspective; strengthening payment systems’ resilience to climate risks; developing climate risk disclosure norms for regulated entities; providing inputs to government for finalising taxonomy on climate risks; and publishing a risk management framework for managing climate-related financial risks.

9. Adoption of AI/ML in the Reserve Bank

(articulation of an AI policy for the Bank, increased use of AI/ML for effective supervision; management of cyber risks; and forecasting, mowcasting and surveys)

10. Financial Sector Cloud Infrastructure

(building an Indian Financial Cloud by establishing a cost-effective cloud facility for the financial sector to enhance the security, integrity and privacy of financial sector data while facilitating scalability and business continuity; and building an internal AI cloud by developing an enterprise-wide platform with AI/ML capabilities to enhance operational efficiency, productivity, data analytics, risk management, decision making and customer experience.

11. Transformational Shifts in Data Collection, Processing and Storage

Developing data mesh with regulated entities; cloud quantum computing services for analytics; and geo-tagging for supporting high frequency data analysis)

12. Safeguarding Users Against Payment Frauds

(by widening and deepening consumer awareness; making payment systems more safe and secure; and identifying and implementing solutions for proactive prevention and quick redressal of frauds.

13. Developing a Secure Global Financial Messaging Hub

(Exporting financial networks and messaging systems as alternative platforms)

14. Making Reserve Bank’s Human Resources and Infrastructure Future Ready.

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