By 
The Reserve Bank of India (RBI) is reportedly inclined towards adopting a “hands-off” stance in regulating FinTech companies, emphasizing adherence to customer verification and data protection protocols.
P. Vasudevan, RBI’s Executive Director responsible for enforcement, conveyed that there are no stringent measures forthcoming concerning FinTech regulation. The central bank aims to foster a conducive environment for FinTech innovation while ensuring compliance with regulatory standards, as per Bloomberg’s report on Friday (Feb. 16).
This inclination towards a more lenient regulatory approach aligns with RBI’s broader objective of nurturing the growth and development of the FinTech sector, as emphasized by other RBI officials.
However, recent reports indicate various regulatory actions taken by the RBI in recent weeks. Visa and Mastercard recently suspended intermediated commercial card payments in India following RBI directives, which sought clarifications on the role of business payment solution providers (BPSPs) in commercial transactions.
The RBI’s move aims to address concerns regarding money flows to merchants lacking proper Know Your Customer (KYC) validation, as reported by the Economic Times (ET). While their bank accounts may have undergone KYC processes, these merchants might not be authorized to accept card payments.
Furthermore, the RBI issued an order on Jan. 31 instructing Paytm Payments Bank to cease operations due to compliance issues identified during an audit. The regulatory directive follows a prior order in 2022 to halt new customer acquisitions by the bank pending an audit. The recent audit revealed persistent non-compliance issues, prompting the RBI to take further supervisory action.
Additionally, the RBI uncovered numerous Paytm Payments Bank accounts lacking proper identification, leading to the submission of this information to the country’s financial crime-fighting agency.
While the RBI asserts regulatory vigilance, both Paytm and Paytm Payments Bank have denied any investigation by the Enforcement Directorate, according to Reuters.
As the FinTech landscape evolves, RBI’s “hands-off” regulatory stance seeks to balance innovation with regulatory compliance, ensuring a robust and sustainable financial ecosystem in India.
Comments