RBI Governor Shaktikanta Das on Friday said the entry of big tech firms into the financial sector poses systemic concerns like overleveraging at the borrowers’ ends.
The entry of firms like Google, Amazon and Facebook (Meta), referred as big tech companies, also poses question marks around competition and data privacy. “They (big tech) carry risks, which need to be properly assessed and dealt with,” Das said while speaking at Modern BFSI Summit 2022 organised by Financial Express. Such companies can include entities in e-commerce, search engines and social media platforms that have started to offer financial services in a “big way” on their own or through tie-ups, he said, adding this is leading to the use of new methodologies in credit assessment.
“Such large-scale use of new methodologies in credit assessment can create systemic concerns like overleverage, inadequate credit assessment and similar other risks,” he added. Das said deploying harsh recovery methods like calling up at odd hours or using foul language is “unacceptable” and assured that the RBI is paying “serious attention” to such happenings to ensure necessary action is taken to curb such activities.
He said most of such instances are reported from unregulated entities, but added that the central bank has also come across such tactics being used by entities regulated by the RBI, and urged all players to give special attention to the same. The comments came at a time when there have been allegations of suicides by many borrowers triggered by harsh recovery practices by agents. The central bank will continue with its role to foster innovation while trying to contain the systemic challenges, he said, adding that the RBI will soon come out with a discussion paper on digital lending.