Key Takeaways
- The RBI is frequently criticized for being against innovation.
- The former RBI Governor previously warned that crypto poses a risk to financial stability and sovereignty.
- India imposes a 30% tax on crypto gains.
The Governor of the Reserve Bank of India (RBI) has stressed the need for compliance and responsible innovation from the nation’s growing financial technology (fintech) firms.
Fintech firms are an increasingly crucial element of India’s economic growth and modern financial system. However, such growth poses regulatory challenges, as firms enter the space.
An Open Dialogue
RBI Governor, Sanjay Malhotra, has met with representatives of India’s fintech firms, comprised of industry associations, payment system providers, lenders and self-regulatory agencies as part of a “series of engagements” with the ecosystem.
Highlighting the importance of the ongoing consultations and the critical role of fintechs, Malhotra stressed the need for a sensible approach. As per a statement from the RBI:
“The Governor underscored the need for responsible innovation and emphasized the need for ensuring compliance by the entities who are new to regulatory space.”
It reflects the RBI’s aims to foster innovation while mitigating the downsides and consumer risks, a common balancing act that governments around the world continue to struggle with.
New financial technologies tend to outpace the regulatory regimes they launch under. Compliance is necessary to avoid calamities, such as fraudulent transactions, data breaches and predatory practices.
The RBI is maintaining an open dialogue with these firms via its newly-launched FinQuery portal, which gives fintechs more direct communication channels to address concerns, as well as promote transparency and innovation.
A New Direction
The prior RBI governor, Shaktikanta Das, who took a stricter enforcement approach in maintaining regulatory oversight, gained a reputation for taking a more hawkish approach toward non-banking financial companies (NFBCs), as well as actively penalizing non-compliant firms.
Notably, in late October 2024, before stepping down as RBI Governor, Das cautioned NFBCs on placing innovation before compliance. He argued that the “imprudent growth at any cost approach” would be detrimental to fintechs.
Conversely, under Malhotra’s leadership, the RBI is taking a proactive consultive approach, which may serve to maintain growth and oversight.
Eddie is a gaming and crypto writer at CCN. Covering the often weird and wonderful world of Web3 with an adoring, but skeptical eye.
Prior to CCN, Eddie has spent the past seven years working his way through the crypto, finance, and technology industry. He began with PR and journalism with Bitcoin PR Buzz and BitcoinNews.com, eventually working his way to become a copywriter with a dozen firms, including the likes of Polkadot before returning to journalism in 2023.
Having studied Radio production and journalism at University in the UK, Eddie spent a few years making podcasts and presenting on a local London radio station as he built up his writing chops.
A lifelong skateboarder, Eddie can often be found at the skatepark or touring the streets looking for something new to try. That, or kicking back playing JRPGs on his original PSP.
