Blog

The Reserve Bank of India has raised concerns around Big Tech companies such as Google, Facebook, Amazon, Apple and Microsoft extensively pushing into the financial services sector, saying the extent of their involvement in the country could challenge its stability and governance of the ecosystem.

It added that while Big Tech in the fintech space in India can offer opportunities to drive the government’s goal of top-to-bottom financial inclusion, there are some worries around cybersecurity risks, data privacy, an uneven playing field for Indian banks and fintech startups, and antitrust issues.

“First, they (Big Tech) straddle many different (non-financial) lines of business with sometimes opaque overarching governance structures,” the RBI said in its biannual Financial Stability Report that gauges the health of the Indian banking system.

“Second, they have the potential to become dominant players in financial services. Third, Big Techs are generally able to overcome limits to scale in financial services provision by exploiting network effects,” it further noted.

In a bid to solve those issues, the central bank said that other global central banks and financial regulators should set down an international standard of operation for Big Tech companies, based on coordination of rules.

It also suggested that financial stability objectives may be “best pursued by blending activity and entity-based prudential regulation of Big Techs”.

In India, several of these Big Tech companies – called so because of their high valuations and includes Facebook, Apple, Amazon, Microsoft and Google – already provide fintech services in India. Facebook’s WhatsApp recently launched WhatsApp Pay, while Amazon wallet and Google Pay are some of the most widely used apps in India.

The RBI-regulated National Payments Corp of India (NPCI) has already imposed a 30 percent volume cap on digital payments for all third-party application providers, in any given quarter, from 2022. TPAP companies include payment apps such as PhonePe, Amazon Pay, WhatsApp Pay and Google Pay.