RBI executive director Ajay Choudhary on no sure-fire way to regulate fintech sector


RBI chief executive Ajay Choudhary on no sure way to regulate fintech sector

Head of the Reserve Bank director Ajay Choudhary said there is no “sure way” to regulate fintech players, making it clear that such companies have a responsibility to operate in a balanced manner. He said companies in the industry should have the right intent while developing offerings and robust governance for the orderly growth of the industry.

“There is no surefire way to regulate fintechs in a way that maximizes their positive impact while protecting the financial system and customers from the risks,” Choudhary said in his speech at the Global Fintech Fest here.

“If the goal is to protect and promote customer interests and the orderly development of the financial system, then the actor in the balancing act must be the fintech industry itself,” he said.

also read

Digital currency to be piloted this year, says RBI Lieutenant Governor
Indiaamp39 fintech market is set to reach 1 trillion by 2030, says Chief Economic Advisor

“I believe whether in life or in business, balance comes from focusing on the right things. In my opinion, it cannot just come from regulation. Regulation can only be a supporting piece while the fintech itself has to drive the big balancing act,” he added.

READ:  USM Research Development Director Offers Testimony on Emerging Technologies before Congressional Committee

Choudhary said he would require fintech players to focus on customer centricity and governance, rather than viewing the latter as just compliance.

The comments come at a time when the RBI has increased its focus on the fintech sector, and its recently released guidelines on digital lending apps have caused a stir from some companies that have expressed concerns.

Previously, Choudhary said the key role for regulators is to strike a balance, adding that sustainability is about balancing the needs of the future with the needs of today.

Acknowledging that there is a technology-enabled transformation happening around the world right now, and that the contribution of fintechs is phenomenal and gratifying, Choudhary said, “We also need to be aware of the risks and protect the financial system.”

READ:  Executive Order Raises Regulatory Risks for Foreign Investment Across U.S. Economy

“We are working to develop an appropriate framework for the development of the fintech ecosystem to ensure that innovation is consistent with the stability of the financial system,” he said.

He said fintech players must avoid losses to customers, refrain from imprudent lending, avoid discrimination or biased outcomes, minimize negative outcomes, ensure financial integrity and manage the customer experience.

A company must try to be transparent, and creating and sharing key factual statements with customers will be a key aspect for customers, he added.

He said an additional regulatory target of competition has emerged through the involvement of technology companies in the financial sector, both as technology service providers and financial service providers.

Choudhary also said that a pilot project to shorten the time required for a Kisan credit card (KCC) Loans taken by farmers on minutes from the current 3-4 weeks courtesy of the automation tools.

READ:  Poco brings "MADest" offers and discounts on these smartphones

The pilot is carried in Tamilnadu and Madhya Pradesh through automation and data provider integration, he said.

“Loan disbursement from loan application to disbursement in KCC up to Rs 1.6 lakh can be done in minutes,” compared to 3-4 weeks processing time earlier, Choudhary said.

“We just integrated and accordingly tried to connect it with all the data provided for smooth credit movement,” he said.

Choudhary said that if successful, the pilot will reduce costs, improve turnaround times and enhance the customer experience. All that is required for such a project to work is the integration of “small parts” into the bank, but he regretted that this had not happened “for tens of years”.

FacebookTwitterlinkedin




Source link