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The Reserve Bank of India (RBI) has revealed its strategic initiatives to launch a fintech repository and a state-of-the-art cloud facility for financial services firms as part of its comprehensive developmental and regulatory policy measures.
The proposed fintech repository aims to capture crucial information about fintech entities for the benefit of regulators and stakeholders. While Indian fintechs will be encouraged, but not obligated, to deposit data regarding the nature of their activities, products, technology stack, and financial information, the RBI anticipates that the aggregated data will play a pivotal role in designing appropriate policy approaches. The central bank aims to have the fintech repository operational by April 2024, with its Innovation Hub leading the implementation.
In a deliberate shift away from overreliance on existing public and private cloud facilities, the RBI plans to establish a cutting-edge cloud facility dedicated to the country’s banks and financial entities. This initiative is envisioned to enhance the security, integrity, and privacy of financial sector data, promoting scalability and business continuity. The RBI has entrusted the task of setting up and operating the facility to its wholly-owned subsidiary, Indian Financial Technology and Allied Services (IFTAS), with a future transition to a separate sector-owned entity. Although a specific launch date has not been disclosed, the RBI envisions a phased rollout in the medium term.
In conjunction with the fintech repository and cloud facility, the RBI introduced a series of regulatory adjustments. Noteworthy proposals include exempting certain categories of recurring online payments up to ₹1 lakh from additional factor authentication (AFA). Additionally, for India’s Unified Payments Interface (UPI), the RBI plans to raise caps on payments to hospitals and educational institutions from ₹1 lakh to ₹5 lakh per transaction, encouraging the use of UPI for medical and educational services.
The RBI’s regulatory measures extend to addressing “moral hazard issues” in lending, emphasizing pricing and credit management. It aims to establish a unified regulatory framework for connected lending across all regulated entities. The RBI will also subject web-aggregators of loan products (online loan comparison platforms) to a comprehensive regulatory framework, promoting operational transparency and informed consumer decision-making.
Furthermore, the RBI proposes a unified regulatory framework for hedging foreign exchange (FX) risks, bringing various transaction types, including over-the-counter (OTC) and exchange-traded, under a single master direction. This strategic shift aims to enhance operational efficiency, risk management, and facilitate easier access to FX derivatives, particularly for small-exposure users.
In essence, the RBI’s recent measures underscore its commitment to fostering connectivity, data sharing, transparency, and collaboration across all facets of the financial sector.
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