No foolproof method of regulating the fintech industry; operators are responsible, says RBI Executive Director

• ByStartupStory     |    September 23, 2022

Ajay Choudhary, executive director of the Reserve Bank of India (RBI), stated on Thursday that there is no “sure-fire solution” to regulate fintech businesses and emphasised that it is their responsibility to conduct themselves responsibly. He stated that for the sector to flourish in an orderly manner, firms in the market need have the proper intentions while releasing offerings and having strong governance.

Speaking at the Global Fintech Fest in this city, Choudhary stated, “There is no sure-fire way to govern the fintech in a manner that maximises their good impact while also protecting the financial system and users against the hazards.

“The performer of the great balancing act has to be the fintech sector itself,” he said, “if the goal is safeguarding and furthering the interest of clients and orderly development of the financial system.”I think that maintaining balance in both life and business comes from concentrating on the correct things. It cannot, in my judgement, come through regulation alone. The big balancing act must be driven by fintech, and regulation can only be a supporting component “Added he.

Choudhary stated that he would advise the fintech industry participants to put a strong emphasis on customer centricity and governance rather than viewing the latter as mere compliance. The remarks come as the RBI has increased its emphasis on the fintech industry, and its recently announced guidelines on digital lending apps have sparked controversy with some businesses raising worries.

The main responsibility of regulators, according to Choudhary, is to strike a balance between the requirements of the present and those of the future. The contribution of fintech is spectacular and satisfying, and Choudhary acknowledged that there is a global tech-based transformation underway at the moment. However, he added that “we also need to be vigilant about the danger and defend the financial system.”

To ensure innovation is balanced with the stability of the financial system, “we are working on building a suitable framework for developing the fintech ecosystem,” the man stated. According to him, the fintech players must prevent client losses, abstain from risky financing, eliminate bias or discriminatory outcomes, minimise negative outcomes, maintain financial integrity, and manage customer experience.

Making and communicating crucial fact statements with customers will be a key feature for customers moving forward, he noted. An organisation must make an effort to be open. He claimed that the involvement of tech firms in the financial sector as both tech and financial service providers has given rise to an additional regulatory objective of competition.

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