RBI Deputy Governor Says Some Finance Friction Is Useful: What It Means for Borrowers

RBI Deputy Governor Swaminathan has said that not every friction in finance is inefficiency, as reported by Business Standard. Put simply, some slow or extra steps in banking exist for a good reason.

For you, this means checks like ID proof and repeat confirmations may not vanish. They can feel like a hassle. But many of them guard your money and keep lending safe.

Key takeaways

• Friction means any step that slows a money task, like an ID check or a waiting gap.
• The deputy governor's point, as reported, is that slow doesn't always mean wasteful.
• Some checks protect you from fraud and from borrowing more than you can repay.
• Speed still matters, so compare lenders on total cost and not only on payout time.
• The headline names no new rule, so your EMI and deposit rates stay as they are.

What does friction in finance mean?

Friction is anything that adds a step, a wait or a cost to a money task. Think of KYC, which stands for know your customer. It's the ID and address check a bank does before it opens your account.

Other examples are an OTP (one-time password) before a payment and a loan officer asking for income proof. Each one adds a few minutes. Each one can also stop some kind of harm.

The headline suggests a split between two things. One is waste, like a form that asks the same thing three times. The other is a useful pause, like a check that stops a scam. We only know the headline, so we can't say which steps were named.

How useful friction protects you

Think about a fraudster who gets hold of your phone number. If money moved with no checks at all, your savings could vanish in seconds. A confirmation step gives you a moment to say no.

Loans work the same way. A lender who checks your income and past repayments is being careful. That makes it less likely you'll end up with debt you can't carry. The check slows approval a little. It also helps keep your credit record clean. The RBI sets many such norms for banks and NBFCs (non-bank lenders).

What it changes for borrowers and savers

Nothing changes in your EMI or your deposit rate today. The remark is a view, and the headline doesn't mention a rate or rule change. But it's a handy nudge on how to judge speed.

Here's a simple example. Say you need a ₹2,00,000 personal loan for 3 years. Two lenders offer it. One pays out in 10 minutes. The other takes a day and checks more.

Option	Rate a year	Fee	Monthly EMI	Total interest + fee
Lender A (instant)	14%	2% = ₹4,000	about ₹6,835	about ₹50,060
Lender B (slower)	13%	0.5% = ₹1,000	about ₹6,741	about ₹43,680

These numbers are only an example. Lender A feels easier, but it costs you about ₹6,380 more over three years. A day's wait saved real money here. You can test your own numbers with the EMI calculator.

Who is affected

First-time borrowers feel it most, since the checks are new to them. Senior citizens and people new to banking apps may find extra steps slow. Small savers gain the most from fraud checks. Lenders feel it too, as they balance speed against risk.

What to do now

1. Keep your ID, address proof and income proof ready, so checks go fast.
2. Read each confirmation screen before you tap approve.
3. Compare the total cost, not just the payout time. Our personal loan guides can help.
4. Check your eligibility first, so you don't apply and get turned down.
5. Never share OTPs, even with someone who says they're from your bank.

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Frequently asked questions

Is the RBI removing KYC or other checks?

Nothing in the headline says so. It only says that not every friction in finance is inefficiency, as reported by Business Standard.

Why do banks ask for so many documents?

Rules require banks to know who their customers are. Documents also show whether you can repay a loan.

Does a faster loan cost more?

Often it can, but not always. Compare the rate, the fees and the total cost before you accept.