RBI's Shaktikanta Das urges fintech players to form a self-regulatory organisation soon

"I would like to use this opportunity to urge and encourage the FinTechs to establish a Self-Regulatory Organization themselves," Shaktikanta Das said in a speech.

The Reserve Bank of India (RBI) Governor Shaktikanta Das on September 6 urged fintechs to establish self-regulatory organisations (SRO) over the next year.

"I would like to use this opportunity to urge and encourage the FinTechs to establish a Self-Regulatory Organization themselves," Das said in a speech, at Global Fintech Fest (GFF) 2023.

This comes at a time when RBI has cracked down on data privacy issues, and unethical business conduct at fintech companies operating in India.

“Digital innovations, at times, have also led to cyber-risk and data security related issues. Illustratively, mushrooming of illegal loan apps, many of which had their origin in foreign jurisdictions, have led to serious concerns about breach of data privacy, unethical business conduct, levying of exorbitant interest rates, and harsh recovery practices,” added the RBI Governor.

In August 2022, the RBI released norms to regulate digital lending to crack down on the growing number of frauds and unlawful activities.

On June 8, the regulator approved the first loss default guarantee (FLDG) system for fintech companies, by which they would partially cover losses if a borrower defaults. The RBI fixed the FLDG at 5 percent for loan defaults.

"By providing clear governance structures, fintechs can
demonstrate their commitment to transparency, accountability and
responsible decision-making," he added, during his speech at GFF.