The Reserve Bank of India (RBI) has warned against letting big tech companies into financial services in the country, a report from the Economic Times of India says.
Doing so could upset stability and governance.
The central bank listed some of the difficulties, including antitrust issues, monopoly concerns and cybersecurity risks, along with concerns around data privacy.
As the RBI makes this statement, the Indian government has been fighting against big tech firms, particularly Twitter, with the struggle based around the implementation of the new Intermediary Guidelines and Digital Media rules. And other companies like Amazon, Google and WhatsApp have participated actively on India’s real-time payments network Unified Payments Interface (UPI). Amazon and Google have allowed financial intermediary services including loans and card payments on their payment platforms.
RBI has said it considers several different things in terms of the threat of big tech.
“First, they straddle many different (non-financial) lines of business with sometimes opaque overarching governance structures,” the central bank said, according to the report. “Second, they have the potential to become dominant players in financial services. Third, Big Techs are generally able to overcome limits to scale in financial services provision by exploiting network effects.”
According to the report, RBI wants to see big tech companies regulated independently against some predetermined standards in a system similar to anti-money laundering (AML) practices.
RBI Governor Shaktikanta Das has said FinTechs are likely to have a new and burgeoning influence over finances in the country. He said FinTechs were “expected to challenge the financial sector with innovations and its exponential growth. Harnessing FinTech for customer services will effectively control costs and expand the banking and nonbanking businesses.”
That will come with more digital payments and lending across all sectors of banking.
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