Bridge between depositors and borrowers.
without naming Google and Equitas tie up to deposit, T. Rabi Shankar, RBI Deputy Governor Speaking at the Global Fintech Fest, it also said that entities other than banks are not allowed to deal in direct deposits.
RBI Deputy Governor T Rabi Shankar said, “Banks are uniquely placed to provide this service as they can create money and credit and thus act as liquidity provider for the economy.”
“Any fintech entity that provides such liquidity services is effectively acting as a bank and therefore must be subject to the same legal, regulatory, supervisory arrangements that a bank is under. The reason is that in almost all countries, entities other than banks are not allowed to deal in direct deposit or deposit-like money.
Shankar also said that fintech should be considered and should be a partner for financial institutions.
“The ideal approach for fintech companies is for banks or other financial institutions to be competent and perceived as partners. Competition for banks does not come from fintech firms but from other banks that better leverage fintech,” said the deputy governor.
Speaking on the need to regulate fintech players, Shankar said that regulation around fintech should be more entity-based than activity-based,
“The regulation approach also needs to be adapted to the type of entity being regulated,” he said. “While similar activities should attract similar regulation in most cases, such activity-based regulation may be less effective than entity-based regulation when one is dealing with financial activities by large-tech firms.”
Shankar also told that Cyber security
Risk is likely to outweigh financial risks for all. The deputy governor also highlighted that countries need to address legislative and regulatory deficits in dealing with concerns around privacy, security and monetization of data.
Shankar also said that the rules relating to data issues need to be adapted to a world where the boundaries between financial and non-financial firms are becoming increasingly blurred.
“In many ways, regulation is a process of slowing down ever-evolving value chains so that legislation has time to take hold,” the deputy governor said.
“Slowing down the process of change may lead to criticism that the regulator is suppressing innovation, but it is often the best way to protect customers,” Rabi Shankar said in his speech.