“The fundamental point is that any entity that provides banking services needs to be subject to the same regulation as banks. A regime where regulation of non-banks and fintechs is regulated financial firms, such as banks or their subsidiaries, Not linked to regulation. Similar services would create inefficiencies and risks associated with regulatory arbitrage,” Shankar said.
He cited the recent instance of prepaid instruments being used to extend credit lines without proper license and also indicated big techattempts to raise deposits as cases of “regulatory arbitrage” which reserve Bank of India Concerned about and will take action against it.
“A non-bank undertaking banking operations needs to be licensed and regulated like a bank if we want to avoid inefficiencies caused by different regulations for similar activities in different entities. activities should not be allowed.” ” she added.
He argued that this would not kill innovation and suggested that banks could tie-up or outright buy such technologies to ensure that customers get the best services available in the market.
He clarified that no regulator has the luxury of allowing itself to disrupt the financial system in the hope that the market may eventually reach its own equilibrium.
“RBI’s data localization guidelines aim to secure users” the payment The data, the RBI’s warnings on cryptocurrencies and its public stance were driven as much by policy sovereignty as by the need to protect uninformed investors.”
“It is a distinct possibility that the ambiguous or unclear stance of regulators or authorities globally has contributed to the increase in demand and valuations over the past two years,” he said, adding that red flags raised by the RBI have helped limit losses in India.