Dr Amitabh Rajan
  • August 1st, 2019
  • Exito

In conversation with Dr Amitabh Rajan, Chairman, Reserve Bank of India.

Dr. Amitabh Rajan is an IAS Officer of Maharashtra cadre and the former Home Secretary and Additional Chief Secretary of Maharashtra. He currently heads the Reserve Bank of India Services Board as its Chairman, and is also an Independent Director in the Board of the State Trading Corporation of India.

Q-1. How should  we conceptualize the BFSI Sector in an economy? In what way is the sector an integrated whole?

Structurally as well as functionally, BFSI is a wide range of activity. When you look closer, you are struck by the enormity of the institutional-web before you, and the associated qualitative depth in its evolution-process. You then realize that the term people use (BSFI) to highlight the grouping of banking, financial services and insurance together, actually conveys only a bit of entrepreneurial anguish for excellence and risk at work.

For State and Society, the concept of BFSI is useful : it allows them to take focused decisions on three crucial ethical concerns — (i) consumer protection, (ii) firm-level integrity, and (iii) fair competition. The concept also helps governments to take evidence-based policy-view on strengths, weaknesses, opportunities and threats within an important segment of the nation’s entrepreneurial activity. It allows them to comprehend market cycles deeper.

Q-2.  What have been the challenges before this sector in the decade since 2008

In my keynote address I will be discussing this point with details. Broad contours have already been set by Nobel Laureate Joseph Stiglitz in his writings [Freefall: Free Markets and the Sinking of the Global Economy (2009), The Euro and its Threats to the Future of Europe (2016), Globalization and it’s Discontent (2017 Edition), and People, Power and Profits: Progressive Capitalism for an Age of Discontent (2019). Besides, there is a thousand-page wisdom on specifics in the second edition of the Oxford Handbook of Banking (2015), for example-the end of the neoliberal paradigm in mainstream global policy is the first point, the necessity in regulation is the second and the creative challenge of new technologies in growth is the third. The old is dead, but the new is yet to be born.

Q-3.  And the prospects of harnessing innovations in this sector in the next five years

Prospects are definitely there. Data Science, driven by Artificial Intelligence and Machine Learning, is already yielding unprecedented business insights. Prospects of Blockchain for the BFSI Sector has huge potential. We today are empowered with the combined strength of groundbreaking technology. New levels of productivity can be achieved if humans and machines are allowed to work harmoniously at the level of the firm and in an environment of corporate ethics and knowledge-driven regulation.

All this does not mean that there shall be any problems : new knowledge at the project-level is still vendor-driven, and the streak of technological determinism is not missing from tech-precepts. Without the ethic of interdisciplinary discourse in knowledge-management and team-building, things are bound to fail on the ground. To succeed, we need an atmosphere of ethics, transparency and respect within systems.  

Q-4. In your keynote address, do you propose to cover insights from institutional economics and regulatory studies? Why is institution-building necessary for the Fintech today

Entrepreneurial endeavour needs an institutional framework of performance. It is an organized act, conducted in accordance with the laws of the land. It also requires entry into the market for techno-financial goals. Institutional Economics provides us a lens through which one looks beyond statements on ‘planned order’ in nations and gets into the symptoms of the ‘evolved order’ in existence. I have used this method in my Articles on economic theory, governance reform and regulatory intervention.

Fintech is an idea whose time has come, and there is already a pressure of experts on governments to be explicit on contentious policy issues and resultant institutional framework. Authoritative policy-pressure began when ,after two years of deep thinking, the IMF and the World Bank together came out with The 12-point Bali Fintech Agenda on 7th August 2018. Since then governments have thought, but somewhat reluctantly. All along history, technology and finance have had a symbiotic relationship : tectonic-shifts in their relationship must, therefore, be responded to with care, caution and speed.

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