Although fintechs prioritise capital, they cannot bypass compliance, said P Vasudevan, executive director, Reserve Bank of India (RBI), on Thursday, adding that the regulator, in its meetings with venture capitalists and co-founders, has emphasised that fintechs have to imbibe the element of compliance and ensure it is never compromised, irrespective of scale.
Speaking at the Global Fintech Fest, Vasudevan said, “…when we meet venture capitalists and co-founders…we tell them very clearly that please imbibe the element of compliance in your investment entities and see to it that compliance is never compromised irrespective of scale.”
He added that the regulator is also trying to ensure that the ease of regulation is available, the compliance cost does not impact much, and there is a level playing field between the traditional lenders and fintechs as well.
“Going forward, we can look at one single authorisation for any of the payment systems one is doing,” he said.
Vasudevan also highlighted that many entities are operating in the fintech sector, and over a period of time, it has become a sort of competition amongst themselves. “We are looking at partnership, collaboration, and competition with the banks, but here entities are partnering amongst themselves,” he said.
“As an industry, it is important to look at how many entities should be there in a particular space and discuss amongst yourselves how much we can afford,” he said, adding that the SRO could be one more step in the direction where we can have these discussions and probably the players can also discuss amongst themselves.
Commenting on the concerns raised by a member of the US Federal Reserve Board of Governors, Christopher J Waller, on interlinking fast payment systems, Vasudevan said that while the Federal Reserve governor was apprehensive about some of the issues that need to be sorted out before FedNow and UPI, “we are trying to be positive that even though it takes some time, it will be worthwhile because many things will be cheaper and faster.”
On Wednesday, Waller had said that interlinking fast payment systems might increase the risk-management burden for banks that participate in them. The promise of interlinking, which is essentially interoperability between or among domestic fast payment systems, although sounds simple, is not simple to achieve, he had said.
First Published: Aug 29 2024 | 8:08 PM IST
