No surefire way to regulate fintech sector: RBI executive director

No surefire way to regulate fintech sector: RBI executive director


Mumbai:

Reserve Bank executive director Ajay Choudhary on Thursday said there is no “fixed way” to regulate fintech players, and clarified that the onus is on such entities to operate in a balanced manner.

He said that the institutions in the region should have the right intention while coming out with strong governance and offering for the orderly development of the sector.

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

“If the goal is to protect and advance the interests of customers and the orderly development of the financial system, then the actor of the great balancing act must be the fintech sector itself,” he said.

“I believe that in life or in business, balance comes from focusing on the right things. In my opinion it cannot come from regulation alone. Regulation can only be a helpful component, whereas fintech has to be The great balancing act itself has to be driven,” he said. added.

Mr Choudhary said he would prescribe fintech players to focus on customer centricity and governance, not just looking at the latter as compliance.

The comments come at a time when the RBI is shifting its focus to the fintech sector and the recently issued guidelines on digital lending apps have raised concerns with some entities.

Earlier, Mr Choudhary said that the main role of regulators is to find a balance and added that sustainability is about balancing the needs of the future with the needs of today.

Acknowledging that there is currently a technology-driven change around the world and the contribution of fintech is unprecedented and satisfying, Mr Choudhary said, “We also need to be aware of the risks and safeguard the financial system”.

“We are working on developing a suitable framework for the development of the fintech ecosystem to ensure balanced innovation with the stability of the financial system,” he said.

He said that fintech companies should avoid harm to customers, avoid unreasonable lending, avoid discriminatory or biased results, minimize adverse consequences, manage financial integrity and customer experience.

He said that an entity should strive to be transparent, and creating and sharing important fact details with customers would be an important aspect for customers.

He added that an additional regulatory objective of competition has arisen due to the participation of technical entities in the financial sector as technical service providers as well as financial service providers.

Shri Chowdhary also said that there is a pilot project to reduce the time taken for Kisan Credit Card (KCC) loan availed by farmers through automation tool from the present 3-4 weeks to few minutes.

He said the pilot is being run through automation and integration of data providers in Tamil Nadu and Madhya Pradesh.

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

“We just integrated and accordingly we tried to link it with all the data provided so that there could be seamless movement of credits,” he said.

Choudhary said that if successful, the pilot will bring down costs, change timing and improve customer experience. It takes “small pieces” of integration into the bank to make such a project work, but alas that hasn’t happened for “many years”.

(Except for the title, this story has not been edited by NDTV staff and is published from a syndicated feed.)

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Indian Lekhak

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