India’s central bank has identifiedpush into financial services as a challenge for banks in the South Asian market, saying the growing presence of these firms has prompted concerns about creating an uneven playing field. In a report published on Thursday, the of India (RBI) said Big Tech offers a wide range of digital services that hold the promise of supporting financial inclusion, generating lasting efficiency gains, and making banks more competitive. Still, their expansion in the has given rise to “important policy issues.” “Specifically, concerns have intensified around a with banks, operational risk, too-big-to-fail issues, challenges for antitrust rules, cybersecurity, and data privacy,” the Indian central bank wrote.
Big Tech firms “straddle many different (nonfinancial) lines of business with sometimes opaque overarching governance structures” and have the potential to become “the dominant players” in financial services, wrote the central bank, which also regulates themarket in India. “Third, [companies] are generally able to overcome limits to scale in financial services provision by exploiting network effects.” “For central banks and financial regulators, financial stability objectives may be best pursued by blending activity and entity-based prudential regulation of [companies] (an activity-based approach is already applied in areas such as anti-money laundering/combating the financing of terrorism; an activity-based approach is the provision of cloud services, where minimizing operational and in particular, is paramount).”
“Furthermore, as the digital economy expands see Reliance Industries and Tata Group, two Indian conglomerates, slowly entering financial services as Big Tech? The caution comes at a time when the RBI, which in the past decade opened up mobile called UPI, is now opening up the entire national payment network in the country. Several players, including the tech , Google, and Amazon and plastic card processing firms Visa and Mastercard, have applied for licenses to operate retail payments and settlement systems in the country. (RBI is expected to give some of these firms permissions this year.), international coordination of rules and standards becomes more pressing,” it added. It’s worth noting that it’s not clear how RBI defines Is it referring to American tech giants? Does it also
“Nowhere else in the market share caps for those making payments atop UPI infrastructure.”corporates, banks [and] telcos in India and the largest tech players in the world would to build national payment networks.” analysts at Bernstein said of the NUE. An industry executive questioned the concerns raised by RBI, saying no existing — ICICI and HDFC — that already amass a plethora of data about their customers from investing in their digital expansion. banking. And Yono [State Bank of India’s digital bank platform] claims a $40 billion market valuation. Why is their reach not a concern?” The executive, who spoke anonymously, said firms are following the regulations set by the RBI. They use rails built by banks and must only through partnerships with banks. “The RBI is free to make more regulations — and it’s already doing so with wallet KYC restrictions and imposing