Banks and non-bank lenders should ensure safety and adhere to proper due-diligence by regulated entities while partnering with digital lending platforms, Reserve Bank of India governor Shaktikanta Das said on Tuesday while highlighting “unbridled mushrooming” of such apps.
“The RBI, in association with other relevant agencies, is taking steps to address this issue and take further steps as may be necessary,” Das said at the Global Fintech Festival. However, the RBI’s intention is not to penalise anybody or to stifle innovation, Das said.
“I wish to assure the fintech community that the RBI will continue to encourage and support innovation. At the same time, we would expect the ecosystem to pay attention to governance, business conduct, regulatory compliance and risk mitigation frameworks,” he said.
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Das launched a RuPay credit card linked to the Unified Payments Interface to further deepen the reach of cashless transactions. He also rolled out UPI Lite, a feature added to the UPI platform to facilitate smaller transactions and inward remittances for bill payments using the Bharat Bill Payment System.
The UPI has emerged as a major platform for retail payments in India, especially during the the pandemic as the need for digitisation increased, he said. Between March 2020 and August 2022, UPI transactions increased by 427% to touch 657 crore transactions. The number of UPI QR-code-enabled payment acceptance points also registered a growth of 86% to reach 20 crore at the end of July.
Highlighting of the way ahead for the fintech sector, Das said they can partner with traditional lenders to provide credit to the agriculture sector and MSMEs in rural and semi-urban areas. Another frontier for the fintech sector is the account aggregator system, which can be used to access products including credit, insurance and investments for consumers. The central bank is giving greater focus on these initiatives.
The RBI is now actively working towards a phased implementation of Central Bank Digital Currency (CBDC) in both wholesale and retail segments, he said. Introduction of CBDC has the potential to provide significant benefits such as reduced dependency on cash and reduced settlement risk, the central bank had said earlier.