Governor Shaktikanta Das on Tuesday said the RBI will not stifle or penalise fintech companies, but wants them to follow the “traffic rules” where their innovations adhere to certain expectations from the regulator.
The innovations that come out have to enhance the efficiency and resiliency of the financial system, while benefitting the customer, Das said at the third Global Fintech Fest here. The comments from the RBI governor come weeks after the central bank laid out a set of rules for digital lending apps in response to a slew of concerns following a spate of suicides by borrowers. The industry has responded to the rules which will be effective from December 1, expressing concerns about the feasibility.
At the event, one of the delegates asked Das about securitisation and first loss default guarantee (FLDG), a vexed issue, leading to a response from the Governor saying the jury is still out on it and the RBI is yet to fix its stance. The RBI has given ground rules on all the matters, and if anybody has any difficulties, it would appreciate if the industry players come forward to discuss the same.
“Our intention is not to penalise anybody not to stifle any activity, all that we are saying is please follow the traffic rules, Das said. Das said a robust internal product and service assurance framework together with fair and transparent governance will a long way to safe guard the interest of the customers and ensure long-term sustainability of fintech entities themselves. Das said closer coordination between the regulator and the fintechs can help the country as it marches towards achieving the ambition of being a developed nation by 2047 when it will be celebrating its 100th anniversary.
Listing out response to a global hackathon organised by RBI last year, he also said that India is positioned well to take the leadership mantle in the fintech space. Meanwhile, Governor Das also reiterated RBI’s concerns on the big tech companies from a financial stability perspective. The play by big techs, which serve a very large number of customers, lead to concerns of concentration risk and potential spillovers into the system, he said.
potential risks to public policy objectives of maintaining competition, market and business conduct, operational resilience, data privacy, cybersecurity and financial stability also need closer attention, the governor added. Das lauded the Unified Payments Interface (UPI) as the pride of the nation but asked the platform operator National Payments Corporation of India to be extremely watchful as the volumes of transactions go up.
He said in August, the platform which has 260 million users witnessed 6.5 billion transactions, and also acknowledged that NPCI is targeting to take the number of transactions up to 1 billion a day. The NPCI launched three new services on the Unified Payment Interface (UPI) and Bharat Bill Payment System (BBPS) front at the event. This include the Rupay Credit Card on UPI which is also the platform’s debut on the credit side of things, after focusing on the debit side since it’s launch in 2016.
The governor also launched a lite version of UPI which will be a wallet to be topped up with balances of up to Rs 2,000 by users for payments of up to Rs 200. The aim of the service is to free up the stress on banks’ servers because of the transaction volumes. Das also launched a cross-border feature on the BBPS which will help those residing abroad to add Indian billers to take care of frequent payments.