There is a need for stronger self-regulations in fintech firms, P Vasudevan, executive director of the Reserve Bank of India (RBI), said on February 16. The fintech industry could have mechanisms where disputes are taken up and bad behaviour is highlighted, said Vasudevan at an event in Mumbai on 'Securing Financial Stability Amid Global Spillovers’.
Recently, RBI halted Paytm's banking arm from conducting most of its business for "persistent non-compliances and continued material supervisory concerns in the bank".
"The fintech sector is still on its own and we have not tried to regulate it," said Vasudevan. He said that the central bank is encouraging self-regulation through its latest white paper and is awaiting inputs.
However, he said that there would be no stricter regulations than before for fintechs, adding that the central bank action was on Paytm Payments Bank, and not on fintech entity Paytm.
Vasudevan said that earlier Paytm was just like a fintech, operating in certain segments. "(But) after becoming a bank, there are certain expectations that come in and get continuously looked at," said the executive director. By expectations he meant continuous KYCs, which is a regular activity in banking.
"It is not about certain entity or sector being targeted, but about general expectation of good behaviour. If that is not there, then we do step in," said Vasudevan. He said that’s why a lot of time has also been given for activities to unfold and for people to use their money.
He said that enough and more has been said on the Paytm Payments Bank issue. "The RBI governor Shaktikanta Das has mentioned that the central bank will come out with frequently asked questions (FAQs), so let us wait."
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