The Reserve Bank of India (RBI) has rejected the concept of digital-only banks, citing pitfalls to the financial system, according to governor Shaktikanta Das on Friday.
Das stated that there is currently no proposal to regulate neobanks and urged existing banks and non-banks to use technology to deliver financial services.
“We had received suggestions on digital banks,” he said, “but we felt that the idea came with certain risks.” As a result, we have not accepted it at this time.” Niti Aayog, the government think tank, proposed setting up digital-only banks.
Why is the RBI keeping an eye on BNPL: Das also stated that, while the RBI is keeping an eye on companies that offer buy-now-pay-later products, it is not eager to regulate the domain just yet.
Some of the leading BNPL startups include ZestMoney, Postpe, Simpl, and Lazypay, while large e-commerce firms such as Amazon and Flipkart also provide BNPL services to consumers.
The governor said that “buy-now-pay-later,” which is offered by several e-commerce companies, is a lending activity, and that “we must be careful and calibrated in our approach and not start interfering everywhere.”
Some major technological concerns include: Das is also concerned about the entry of Big Tech into the financial sector.
He claims that a wide range of companies, including social media, search engines, e-commerce, and even ride hailing, have begun to offer financial services.
“These companies have a massive amount of data, which has allowed them to provide tailored financial services to entities or individuals who do not have a credit history or collateral.”