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RBI Annual Report | Regulations important to ensure sustainable innovation in fintech

The regulator believes it is pertinent to keep facilitating innovation while also bringing regulatory order in the fintech space.

May 27, 2022 / 12:38 PM IST
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The Reserve Bank of India (RBI) outlined its approach towards the Indian fintech sector, which is largely unregulated in areas such as digital lending and neobanking, saying that even though innovation thrives in the absence of regulations, legislation is needed to ensure sustainable growth.

"As expected, such innovation first disrupts the market and once it establishes its constructive role, the regulators and authorities step in to regulate the space to nurture the innovation in a sustainable manner and to mitigate any associated risks," the RBI said in its annual report for the financial year 2021-22.

The regulator also highlighted that the impact of the fintech segment is growing at both macro and micro levels. The impact is seen across financial stability, cybersecurity, consumer protection and financial inclusion.

In such a scenario, the regulator believes it is pertinent to keep facilitating innovation while bringing regulatory order in the fintech space.

"Balancing such innovation with regulation has been RBI’s nuanced approach that has been dynamically evolving along with market developments," the report read.


RBI is working on laying out a formal set of guidelines for the digital lending space and had set up a Working Group to make recommendations for the same. The Working Group submitted its report to RBI in November 2021.

In an address to the media in April this year, RBI Governor Shaktikanta Das had said that the guidelines are likely to be issued in two to three months' time.


Priyanka Iyer
first published: May 27, 2022 12:38 pm
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