India’s financial sector embraces technology to boost country’s economy

India is investing in the financial services sector’s technology infrastructure to enhance data security, integration, and technological capabilities, thus supporting its economy in the world’s race for digitisation.

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India is taking significant steps to build a robust technology infrastructure to support its financial services sector. Over 60,000 small rural lenders, known as Primary Agriculture Cooperative Credit Societies (PACS), have signed up to join a national Enterprise Resource Planning (ERP) platform to streamline their operations. As part of a digitisation program launched in 2022, the government aims to enhance efficiency and oversight in these community-owned financial institutions.

The shared ERP platform, developed by the National Bank for Agriculture and Rural Development (NABARD), has already seen 62,318 PACS enrol, with trials underway involving 5,673 organisations. The ERP system will manage loan processes, procurement, and HR tasks and offer customer-facing tools. Hardware procurement for the project has commenced, with a budget of around $300 million (£251.6 million).

Another common platform is being developed for 1,851 Agriculture and Rural Development Banks (ARDBs) in a separate initiative. NABARD will also provide this platform, allowing branches and back offices to integrate and digitise legacy data with a project budget of approximately $14 million (£11.9 million).

The Reserve Bank of India also announced plans to establish a cloud computing facility for the entire financial sector. This move aims to enhance the security, integrity, and privacy of financial sector data, enabling scalability and business continuity. The cloud facility will be built and operated by the Reserve Bank’s subsidiary, Indian Financial Technology and Allied Services (IFTAS).

India’s government is also planning to develop a substantial AI infrastructure to meet the public and private sector graphics processing unit (GPU) requirements. While India’s semiconductor sector is still in its early stages, companies like Dell, Lenovo, and HP Enterprise have committed to manufacturing equipment. Such an interest suggests the financial sector’s planned technology infrastructure may be locally produced.