Fintechs Should Focus On Governance, Data Protection, Risk Mitigation: RBI Governor

Reserve Bank of India (RBI) governor Shaktikanta Das has directed fintech startups to put more impetus on frameworks related to governance, business conduct, data protection, customer centricity, regulatory compliance and risk mitigation.

The governor made the comment during a meeting held with fintech startups and industry bodies on Wednesday (December 14). The meeting was also attended by RBI’s Deputy Governor MK Jain and other senior officials.

Lauding the Indian fintech ecosystem, the RBI governor said that fintech initiatives and startups were important segments of an aspirational India. 

Das added that these players were ‘playing a transformative role’ in the financial system through their digital innovations and innovative means of delivery of services. 

The participants of the meeting shared their inputs and called for enhancing the role of fintech startups as well as the allied ecosystem in the country. 

Das reiterated that the central bank will continue to adopt a participative and consultative approach to facilitate innovations in the space.

This is not the first time that the RBI chief has drawn the attention of fintech startups towards strengthening corporate governance and regulatory compliances. 

In September, Das had said that more players were expected to jump on to the ‘fintech road’, adding that it was imperative for every player to follow ‘traffic rules’ for their own safety and for the safety of others.

In the recent past, many startups such as BharatPe, Razorpay and Paytm have been flagged by the authorities and enforcement agencies multiple times for reasons ranging from the lack of internal oversight to their involvement in alleged Chinese lending app scams. 

The result has seen RBI tighten the regulatory noose on startups. RBI has also been slow in processing applications for payment aggregator (PA) licences, as it seeks more clarity from fintech startups on their core models. As a result, the RBI has reportedly rejected PA applications of major players such as Google Pay, MobiKwik’s Zaakpay, Swiggy, and Zomato. 

As RBI seeks greater cooperation from fintech startups, it remains to be seen how the arena scales up in the growing years. As startups look to climb further up, there appears to be plenty of space for new and emerging companies to grow. Inc42 estimates the country’s total addressable fintech market opportunity to grow to $1.3 Tn by 2025.