wordpress blog stats
Connect with us

Hi, what are you looking for?

Delhi High Court seeks replies from RBI, NPCI and Finance Ministry on fintech regulation

The Delhi High Court on Wednesday sought replies from the Law Ministry, Finance Ministry, Reserve Bank of India (RBI) and the National Payments Corporation of India (NPCI) in response to a petition seeking regulation of payment companies like Google Pay, Amazon Pay and PhonePe, among others. LiveLaw was the first to report the development.

The petition, filed by applied economist Reshmi P Bhaskaran, states that in the absence of dedicated regulations, non-licensed technology companies and e-commerce players, “TechFins”, have entered the financial domain through partnerships with existing entities and are competing with regulated financial institutions without having to comply with the same requirements. “That such operation of technology companies in the finance sector poses potential risk to financial security, potential breach of systematic citizen’s data, customers including businesses and customers and is thereby requested to be regulated by the petitioner,” it says.

The petition alleges that TechFin firms operate in an unregulated environment as third-party apps and deliberately identify loopholes in the existing regulatory regime. “That by working as third party providers or as a channel between the financial entities and customers, they are able to take advantage of legal and regulatory loopholes which allows these ‘TechFins’ to offer financial services in their own names without attracting the need for financial/banking license, authorization of compliance with any major regulations.” The petitioner said that the regulatory framework allows non-regulated TechFins to operate in the Unified Payment Interface (UPI) ecosystem as well.

“It is submitted that in terms of regulations, these ‘TechFins’ (for example Google or Amazon) operating under the UPI payment systems as TPAP [third-party apps] are ‘shallow’ entities as it is the Payment Service Providers which bears the brunt, liability and risk mitigation requirements of all regulators and also takes up all the liability of these ‘TechFins’ or Third Party App Providers in the UPI ecosystem,” it says. It said that added together, Google Pay, PhonePe and Amazon Pay control 85% market share in UPI payments.

Further, the petition said that main purpose of TechFins operating payments is to collect more customer data. “That at this juncture it is pertinent to point out that the current financial regulations do not cover the shortcomings that occur from the incorrect use of financial data by TechFin Companies, as the data delivery to financial institutions is not a regulated activity in our country.”

The bench comprising of Chief Justice D N Patel and Justice Prateek Jalan also issued notice to the Securities and Exchange Board of India, Insurance Regulatory and Development Authority of India and the Pension Fund Regulatory and Development Authority seeking their points of view. This is not the first case that Google Pay, PhonePe and others have faced surrounding their regulations and oversight. Communist Part of India member of Parliament Binoy Viswam recently filed a petition in the Supreme Court seeking intervention by the court into how UPI players were collecting data,
Also read

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

You May Also Like

News

A survey by the National Payments Corporation of India (NPCI) found that at least 80% of households now use digital payment apps like Paytm,...

News

In an affidavit filed before the Supreme Court, the Reserve Bank of India (RBI) has said that companies like WhatsApp, Google and Amazon have...

News

While digital payment adoption began to grow significantly post demonetisation, the COVID-19 pandemic accelerated this shift over the last year, according to PwC India’s...

News

We missed this earlier.  A technical policy paper authored by researchers at global card network Visa Inc. has proposed a common protocol that can...

MediaNama is the premier source of information and analysis on Technology Policy in India. More about MediaNama, and contact information, here.

© 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ

Subscribe to Daily Newsletter

    © 2008-2018 Mixed Bag Media Pvt. Ltd. Developed By PixelVJ