The Reserve Bank of India (RBI) claims that it aims to adopt a “hands-off” approach to regulating Fintech companies across a nation that’s home to around 1.5 billion consumers.
In addition to taking a step back from aggressively monitoring Fintechs for now, the reserve bank says it expects these financial tech firms to abide by applicable rules/guidelines, as they pertain to customer verification and data protection. This, according to official statement from RBI Executive Director P. Vasudevan that were issued this past Friday (Feb. 16), as per an update shared by Bloomberg.
There are “no harsher measures coming on Fintech,” Vasudevan clarified.
Vasudevan is currently leading enforcement at RBI, the report confirmed.
Other RBI staff members have stated that the regulatory authority wants the Fintech sectr to make meaningful progress. This recent update has been made following reports of actions taken by the RBI during the past few weeks.
On Wednesday February 14, 2024, it was revealed that Visa and Mastercard had decided to suspend intermediated commercial card payments in India. This move was announced after the RBI reportedly instructed them to take action in this manner.
A Visa rep told media outlets that the payments giant received “a communication from the RBI on February 8, in what appears to be an industry-wide request for information on the role of business payment solution providers (BPSPs) in commercial and business payments,”
Local media outlets in India said that the RBI’s decision might have been influenced, at least in part, by the its effort to suspend a flow of funds to merchants that have not cleared applicable AML/KYC checks.
The banking accounts of said merchants could have been subjected to relevant KYC checks, however, the merchants are not allowed to take card payments as merchants, as per reports from the Economic Times and other local sources.
Recently, the RBI had issued a directive on January 31 instructing Paytm Payments Bank to halt business operations. The banking industry regulatory authority stated that an audit unveiled compliance shortcomings linked to the banking service provider, which handls transactions for the Indian Fintech firm Paytm.
Back in 2023, the Reserve Bank of India had instructed Paytm to halt its new customers onboarding process until an audit is done.
As part of an official statement made on January 31, the RBI stated that the audit revealed “persistent” issues of non-compliance along with “continued material supervisory concerns in the bank, warranting further supervisory action.”
On February 4th, 2024, it was revealed that the reserve bank uncovered numerous Paytm Payments Bank accounts opened without adequate checks and turned these details over to the India’s financial crime-combatting division.
A rep for Paytm Payments Bank claimed that their operations had not yet been probed by the nation’s Enforcement Directorate.
