Skip to main content

High staff attrition a significant operational risk to banks: RBI Dy Guv

By

 Outsourcing, lack of succession planning and staff skilling also areas of concern, Jain says

High attrition and employee turnover pose significant operational risks, including disruption in customer services, as well as ethical issues for banks, Reserve Bank of India (RBI) Deputy Governor M K Jain said. These issues could have an adverse financial impact on banks, Jain added while addressing board members of banks on Monday. Among the risk factors that he listed were high attrition, lack of succession planning, (particularly for critical roles) and skilling of staff, besides outsourcing.

 

Attrition and high employee turnover lead to loss of institutional knowledge and increase recruitment costs. Banks, Jain said, need to ensure that employees have the necessary skills and knowledge to adapt to new technologies and business practices. Referring to the challenges from outsourcing, the RBI deputy governor said its risks include potential loss of control over critical operations, data security breaches and an increased dependency on third-party providers. He also said that banks should be careful about process risks since errors, inefficiencies or breakdowns in operational processes can lead to financial losses, compliance failures or customer dissatisfaction.

 

Risks stemming from ethical issues at the operational level can also have serious repercussions for banks, including reputational damage, legal and regulatory consequences, erosion of customer trust and an adverse financial impact, he cautioned. Jain also dwelled on technology-related risks and said the fintech revolution in banking is bringing a disruptive paradigm shift. Banking services are now being bundled with other financial and non-financial services and giving consumers the convenience of accessing the full spectrum of financial products. Indeed, the pace of technological changes is so rapid that banks will have to transform like tech companies, continuously innovating and investing in technological upgrades, he said. The deputy governor added that the risks of cyberattacks, data breaches and operational failures have also increased.

 

-Business Standard 01st June, 2023.

Comments

Post a Comment

Popular posts from this blog

Data storage norm splits digital payments industry

By
Data storage norm splits digital payments industry  India’s nascent digital payment industry could be thrown into disarray due to the demand by the Reserve Bank of India (RBI) that all user data be stored within the country, fears an industry grouping, which has termed the decision as “heavy-handed”, even as others, including the country’s largest digital payment provider Paytm, have hailed the move.  In a bid to narrow the growing schism, the industry is planning to send a formal representation to the regulator highlighting its concerns, a top official told ET.  “We are trying to build a consensus on the issue," said the person adding that the representation to the central bank will be ready this week.  RBI on April 6, mandated all payment companies—global and local—to set up data storage facilities within India by October. The stringent six-month deadline has attracted the ire of several sections of the industry that fear it will lead to a disruption of wel...
18 comments
Read more

Sebi to finalise options in commodities today

By
The Commodity Derivatives Advisory Committee of the Securities and Exchange Board of India ( Sebi) will meet on Friday with senior officials of the latter, to give a final shape to the rules on options trading in commodity futures, beside revising the warehousing norms to ensure good delivery on settlement. The decision taken, after discussing with the advisory committee, will be placed before the regulator’s board, to finalise the regulations. According to knowledgeable sources, three commodities in each segment, agricultural and non- agricultural, have been proposed for introducing options. It appears commodities from the soya and guar segments are preferred in the former. From the non- agri segment, it is likely that gold, silver and crude oil will be finalised. All these These have better liquidity and both the National Commodity and Derivatives Exchange and the Multi Commodity Exchange, respectively, will be able to introduce the options. In the equity segments, options ar...
17 comments
Read more

E tailers global warehouses may come under tax net

By
E tailers  global warehouses may come under tax net Warehouses of e-commerce companies based in countries such as Australia, Japan, Italy,  Spain, the Netherlands, and Russia may not be exempted from paying the income tax in India  once the multilateral instrument (MLI) to prevent base erosion and profit shifting (BEPS)  comes into force. BEPS refers to the reporting framework mooted by the Organisation for Economic  Co-operation and Development (OECD) and signed by over 100 countries, including India, to  prevent exploiting gaps and mismatches in tax rules to shift profits by multinational  companies (MNCs) artificially to low-tax regimes. The representatives of 68 countries on June 7 this year signed an agreement (MLI) in Paris  to amend their tax treaties to bring them in alignment with measures to prevent BEPS.  However, there is still time for synchronising tax treaties with the multilateral  instrument. India has submitte...
17 comments
Read more