The fledgling fintech ecosystem needs to be “alert” to the country’s interests, and not “subsume” them for business gains, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar said on Thursday.
Much of the fintech sector is unlicensed and unregulated unlike the financiers, and will have to earn the trust by behaving “responsibly”, Sankar said while addressing the annual Global Fintech Fest in Mumbai.
As the sector matures, it has to be seen in the way the entities behave, Sankar said, hinting that it has to behave like the regulated entities like banks and non-bank lenders.
It can be noted that many reputed fintechs have had Chinese ownership, and there have also been murmurs of Chinese play in digital lenders in the past.
“Fintechs need to be alert to social and macroeconomic interests and priorities, and not subsume them to business interests,” Sankar said.
Speaking a day after the RBI issued a licence to an association of fintechs to act as a self-regulatory body, Sankar said the self-regulatory organisation (SRO) will have to ensure that all its members fall in line.
He also exhorted the SROs to ensure that there is no predatory pricing, wherein entities bear losses to decrease the price of services for the end consumer.
Entities should instead use technological progress and other innovations to ensure that services are priced lower, the regulator said.
It is the responsibility of the SRO to ensure that no questionable practices are followed by the fintechs, he said, adding that fair play is very important.
The SRO should also facilitate two-way communication between the regulator and the fintechs.
Meanwhile, RBI Executive Director P Vasudevan asked the fintechs to “respect” compliance-related matters.
“Sometimes when we meet venture capitalists and co-founders, we tell them very clearly that please imbibe the element of compliance in your investment entities and see to it that compliance is never compromised irrespective of scale,” he said while speaking at the same event.
Vasudevan also assured that the RBI is trying to see that the ease of regulation is available and the compliance cost does not impact much.
Sankar, who launched the programmability application on the central bank digital currency, said there is a huge opportunity of growth in the virtual currency.
He, however, declined to give any targets on the CBDC or share a timeline for when the retail CBDC pilot would end.
Addition of newer features to the CBDC will increase the usage of CBDC, he said.
