Key Points
From hiring analysts to scrutinise customer data to holding frequent meetings with executives, India's financial regulator is bolstering oversight of fintech firms in a signal of an end to years of light-handed regulation of a key business sector...
Those steps from the Reserve Bank of India (RBI) come after regular inspections over the past year found a number of fintech firms have been lax in following, for example, customer due diligence, five sources with knowledge of the matter said.. Fintech firms and their investors were given a foretaste of that stricter approach last month when the central bank ordered sector giant Paytm to wind down its banking unit due to, what it termed, persistent non-compliance with regulations...
That directive, which stirred disquiet in the sector, was followed by a separate order this month to Visa asking it to stop business-to-business card payments through third party fintech firms...
Like in India, nimble-footed fintech firms' customer due diligence and data handling processes have also raised concerns for the central banks and regulators globally as they try to tamp down on monopoly, data privacy, money laundering and spillover risk...
Separately, the RBI is also investing in better technology to catch regulatory violations and hiring analysts to study millions of customers' personal data held by the fintech firms, the second source said.. India's finance ministry will hold meetings with the home-grown fintech startups, some of them backed by marquee global investors, next week to urge them to comply with regulations and hear their concerns, Reuters reported on Tuesday...
