RBI Governor Calls For Responsible Innovation In The Fintech Space

Reserve Bank of India (RBI) governor Sanjay Malhotra has underscored the need for “responsible innovation” in the country’s burgeoning fintech space. 

Malhotra made the comments during a meeting with representatives of non-bank payment system operators, fintech players, self-regulatory organisations (SROs) and other stakeholders. The interaction was part of RBI’s engagements with the payments and fintech ecosystem. 

While lauding the role of fintech startups, RBI Governor also called on the new players in the space to comply with existing laws while fostering innovation. 

“… The Governor underscored the need for responsible innovation and emphasised the need for ensuring compliance by the entities who are new to regulatory space. He also emphasised that RBI values such interactions with the ecosystem participants and would continue to adopt a consultative approach,” said the central bank in an official statement. 

RBI said that the participants shared their feedback on the evolving payment and fintech ecosystem and their expectations from the central bank.

The meeting was also attended by Deputy Governors M Rajeshwar Rao, T Rabi Sankar and Swaminathan J, along with executive directors-in-charge of payments, fintech and regulation.

The development comes at a time when the RBI, in recent months, has further tightened its noose around fintech startups for flouting regulatory norms. In October last year, the central bank barred Sachin Bansal’s Navi Finserv and three other non-banking financial companies (NBFCs), including DMI Finance, to immediately stop sanctioning and disbursing loans due to supervisory concerns. 

However, RBI later lifted the curbs on three of the companies after the NBFCs took corrective actions. 

In 2024, RBI also cracked its whip on Paytm Payments bank and followed it up with its crackdown on NBFC-P2P lending in August later in the year. 

Nevertheless, the meeting also comes at a time when Malhotra is stepping into the shoes of former RBI Governor Shaktikanta Das, who retired in November 2024. While Das was credited with fostering a vibrant digital payments ecosystem in the country, Malhotra could be looking to continue the same legacy. 

In line with this, since the appointment of the new RBI governor, the central bank has taken multiple steps catering to the fintech space. Just weeks ago, the bank was examining proposed AiI and machine learning (ML) models for ‘predictive’ analysis of the markets.

Last month, it also launched a mobile app which will offer access to more than 11,000 different series of economic data pertaining to the Indian economy. In the same month, the central bank also allowed small finance banks (SFBs) to offer pre-sanctioned credit lines via unified payments interface (UPI).