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Technological Solutions Needed To Increase Digital Penetration, Says RBI Deputy Governor T Rabi Sankar

Fintechs should be subjected to the same regulatory regime as banks, Sankar said.

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The digital penetration in India is largely limited to urban and metro areas, said T Rabi Sankar, Deputy Governor of RBI while speaking at a recent industry forum.

“We need technological solutions to increase penetration to the vast sections of the population which is unbanked and lacks a smartphone”, he said.

Highlighting the importance of banks in a financial system he said that the banks are a key part of the intermediation system. “Banks bridge gap in space and time between savers and borrowers”, Sankar said. He continued, “Banks are uniquely placed to provide this service because they can create money and credit and therefore act as liquidity providers.”

While other payment facilitators help in transferring money and improving efficiency, they cannot replace the core function of intermediation, he said.

'Fintechs should be regulated'

Any fintech firm, according to Sankar, must be subjected to the same regulatory regime as a bank. He acknowledged various ways in which fintech has helped the delivery of financial services but he believes that they should not be compared and made to compete with banks. “The competition remains within banks, between banks which can leverage fintech better and banks which are not as good as leveraging it”, he opined.

According to Sankar, the regulatory framework needs to be broadened. Various countries should overcome the regulatory deficits in dealing with concerns related to privacy and monetisation of data, he added.

‘India reported one of the lowest digital payments fraud cases’

Throwing light on the measures taken by RBI to protect the customer data, Sankar pointed out the initiatives like Digital Ombudsman Scheme, Benchmarking the payment systems with global practices and Online Dispute resolution. He said, “These efforts have led to India reporting one of the lowest digital payments fraud cases across the globe.”

He concluded his speech by saying that we are in the best of times, with the promise of technological innovation in finance and hope of substantial efficiency gains, better customer experience and greater social wealth. “But we also need to deal with the threats of line frauds, compromise of customer credentials, data privacy and safety”, he cautioned.


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reserve bank of india deputy governor FinTech