In a recent address, RBI Deputy Governor M Rajeshwar Rao raised concerns over the rise of ‘dark patterns’ in the mis-selling of digital loans. Rao highlighted deceptive design interfaces aimed at leading users into availing high-cost loans under the guise of instant loans. The deputy governor urged banks to enhance cybersecurity measures amid growing threats, including fraudulent apps and data breaches.
Rao announced a reevaluation of the risk management framework for lenders, particularly focusing on liquidity and market risk. He emphasized the need to fortify security measures to combat cyber frauds in the evolving tech-banking landscape. The deputy governor stressed the importance of collaborative efforts to protect customers and maintain trust.
Discussing the liquidity framework, Rao acknowledged ongoing global discussions and proposed a review of India’s statutory liquidity ratio (SLR) implemented in 1949. He underlined the necessity of adapting regulations to ensure financial stability and customer protection, especially in the context of the recent surge in small ticket personal loans with high interest rates.
While applauding next-gen fintech innovations, Rao called for a simultaneous redefinition of regulations to balance financial stability and customer welfare. Speaking at the FIBAC 2023 conference, he drew attention to the banking crises in the US and events at Credit Suisse, emphasizing the need for effective regulation despite comparable capital and liquidity levels.
As the financial landscape continues to evolve, RBI’s vigilance remains crucial in addressing emerging challenges and ensuring the resilience of India’s banking sector.
