Speaking at Mission SAKSHAM in Hyderabad, Swaminathan highlighted how technology has changed the way banking risk needs to be assessed. Branch numbers and institutional size no longer show the full picture, even as the RBI follows a four-tier regulatory structure for urban co-operative banks (UCBs).

A bank serving one city can still be exposed to sophisticated cyberattacks originating elsewhere in the world. Fraudsters can shift funds between accounts within minutes. Smaller institutions may be especially vulnerable because they often do not have the technology budgets or specialist teams available to larger commercial banks.

The warning also covered dependence on external technology firms. Many UCBs use vendors for core banking software, data centres and payment applications. These arrangements can reduce costs, but they also place essential operations outside the bank’s direct premises and create dependencies that require close oversight.

Swaminathan urged boards and chief executives to examine how much their operations rely on such providers. A day-long outage at a technology partner could halt banking services, while a weakness in a shared platform could affect several institutions. Management remains accountable and needs clear arrangements to handle vendor failures.