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RBI Guv Shaktikanta Das to fintechs: ‘We are here to support innovation’

Sep 20, 2022 / 06:06 PM IST

While innovations are “very much welcome,” they should be responsible and benefit consumers, the governor said.

RBI Governor Shaktikanta Das

The Reserve Bank of India (RBI) is committed to supporting innovation for fintech companies while keeping in mind consumer protection, Shaktikanta Das, the governor of the central bank, said on September 20.

“I assure fintechs that we are here to support innovation,” Das said at the Global Fintech Festival in Mumbai. “We (RBI) will come two steps ahead if you come one step ahead with innovation.”

While innovations are “very much welcome,” they should be responsible and benefit consumers, the governor said. Fair practices, and robust governance will go a long way in sustaining fintechs’ business models.

Das’ comments come in the backdrop of the RBI’s recently announced digital lending norms. Under the norms released by RBI on August 10, all loan disbursals and repayments through the digital lending apps are to be executed only between the bank accounts of the borrower and the regulated entity without any pass-through or pool account of the LSP or any third party.

Some industry experts and fintech players have said that this could stifle innovation in the sector.

Das said on September 20 that during the pandemic, it was because of fintechs’ innovation that the country, the economy, the financial markets continued to operate as usual. The government and the regulators have created an enabling ecosystem to promote the fintech sector, the governor said, adding that the fintech ecosystem has evolved and is poised for a giant leap.

Going forward, the next decade of finance will be focused on two central themes - sustainable development and technology-led innovations transforming the lives of the common people, Das said. According to him, one of the most transformative roles that can be played by fintechs is in the area of credit delivery in partnership with the traditional lenders, especially in the rural and semi urban areas.

However, while the RBI continues to support technological advancement, it will also ensure enhanced customer protection, cyber security, resilience and manage financial stability, the governor said. It is equally important that adequate attention is placed on governance and conduct issues in fintechs, he added.

Risk of BigTech in fintech

Das warned the risks of BigTech in fintech. He elaborated that innovation has ushered in an era where enormous amount of consumer data is being generated and leveraged the form by a few entities or the so-called BigTech in fintechs.

Such developments, while being very much welcome, also raise concerns on concentration, risk and potential spill overs, as their level of engagement with the financial system strengthens, Das warned.

At present, Walmart-backed PhonePe enjoys a 46 percent share in overall monthly UPI transactions, followed by Google Pay at 38 percent and Paytm Payments Bank at 13 percent.

The entry of big fintech firms into the financial sector can create systemic concerns, including those pertaining to overleverage, Das had said on June 17. Given their increasingly dominant role in payments ecosystem, the RBI, under the vision 2025, had said that the regulator will release a discussion paper on the need for proportionate regulation on such fintechs.

Siddhi Nayak is correspondent at She tweets at @siddhiVnayak
first published: Sep 20, 2022 06:02 pm
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