Weeks after Google and Amazon announced their association in facilitating deposits as part of their payment systems, Reserve Bank of India deputy governor T Rabi Sankar stressed that the regulation of fintechs should be 'entity' based rather than 'activity' based, because of the involvement of Big Tech in the sector. According to the RBI, activity-based regulation means imposing a set of rules on all players offering a particular service while entity-based prudential regulations mean imposing a set of requirements on entities with specific licenses. Sankar said this while speaking at the Global FinTech Fest 2021, about how there is a need to adjust the nature of regulation of fintechs due to the diverse functions they performed. As fintech is transforming the financial landscape, the nature of regulation has to adjust. The sheer diversity in the functions performed by fintech firms, necessitates a widening of the regulatory perimeter. The approach to regulation also needs to adapt to the type of entity being regulated. While similar activities should attract uniform regulation in most cases, such activity based regulation might be less effective than entity-based regulation when one is dealing with financial activities by bigtech firms — T Rabi Sankar, deputy governor, Reserve Bank of India A few weeks back, Equitas Small Finance Bank (SFB) announced that it will now enable users to open fixed deposits (FDs) on Google Pay. Soon, after a few days, Kuvera.in announced that one can opt for fixed deposit buckets being offered on Amazon Pay. Without naming any companies,…
Wary of Big Tech, RBI pushes for regulations that are focused on fintech entities
In a speech, the deputy governor laid out risks posed by Big Tech and referred to some of the RBI’s reforms that faced pushback.
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