Fintech innovations will not change basic nature of financial system: RBI DG T. Rabi Sankar

Reserve Bank of India (RBI) deputy governor T. Rabi Sankar

The Reserve Bank of India (RBI) Deputy Governor T. Rabi Sankar on September 5 said the innovations in the fintech space will not change the basic nature of the financial system.

Rabi Sankar was speaking at the Global Fintech Fest 2023.

“It would be useful to remember that apart from the difference in speed and scope, neither the older innovations, nor the current fintech innovations change the basic nature of the financial markets,” Sankar said.

He further said major transformation that characterizes the fintech ecosystem is the increased efficiency with which financial products and services are delivered and consumed.

This efficiency is driven largely by three factors, digitization of information which can then be accessed, processed and transmitted with ease, and more direct interface between buyers and sellers, between borrowers and lenders, and between payers and receivers, which optimizes transaction change.

Sankar added that fast communication channels that expands the reach of the financial system. "Put together these efficiencies lead to lower cost, quicker transactions and better inclusion."

On self-regulatory organisations front, Sankar said these entities could play a pivotal role in the fintech industry by promoting responsible practices and maintaining ethical standards.

"These industrial made bodies establish guidelines and code of conduct that foster transparency, fair competition and consumer protection," RBI deputy governor said.

By productively addressing issues like market integrity, conduct, among consumers, data privacy, cyber security and risk management, SROs help build trust among consumers, investors and regulators, Sankar added.

In July, T. Tabi Sankar at Moneycontrol start-up conclave said the central bank may bring regulations for the fintech companies after consultation with the industry.

He added that they are working on these regulations on these entities and ecosystem.

Further, Moneycontrol reported that Indian fintech companies are pitching for simpler know-your-customer norms for lending to small businesses and easier access to cheaper capital for priority sector lending after the comments by the T. Rabi Sankar.