These banks had been envisioned to leverage expertise to supply primary banking companies, specializing in monetary inclusion and digital transactions.
The story of such banks has been a combined bag during the last decade with Paytm Funds Financial institution (largest of all of them) dealing with frequent regulatory compliance challenges lately on numerous points together with KYC points, threat administration and many others.
Nevertheless, the outlook and sentiments on digital banking and funds banks have turned damaging ever for the reason that RBI imposed newest set of contemporary restrictions on Paytm Funds Financial institution to be efficient from February 29 this 12 months.
Though Reserve Financial institution of India Governor Shaktikanta Das has already asserted that there isn’t a systemic challenge flowing from the Paytm Funds Financial institution disaster, this episode serves as a wake-up name for India’s fintech ecosystem.
It has highlighted the crucial of regulatory compliance, threat administration, and governance for digital banking entities.
This has far-reaching repercussions for India’s fintech ecosystem and the broader banking sector.
The incident has raised issues concerning the stability and integrity of digital banking platforms. How will it have an effect on funding for fintechs within the coming days is a query uppermost within the minds of stakeholders and traders. Are funds banks nonetheless viable in an UPI period? After all, RBI as regulator has been centered on safety of banking prospects and has already dominated out any rethink of its interventions on the subject of Paytm Funds Financial institution.
Srinath Sridharan, a coverage researcher and company adviser, helps listeners get a way of how he sees the way forward for Funds Banks within the nation. He takes a view that funds banks as an idea is just not viable anymore within the present occasions when UPI is scaling newer heights. Sridharan additionally feels that the time could also be ripe for RBI to go in for a assessment of the licensing framework for numerous classes of banks and convey needed adjustments.
Pay attention in to this blpodcast to know extra.
(Host: KR Srivats; Producer: Amitha Rajkumar)
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