'No sure-fire way to regulate fintech sector, onus on operators to act in balanced way'

Mumbai: Reserve Bank Executive Director Ajay Choudhary on Thursday said there is no "sure-fire way" to regulate fintech players, and made it clear that the onus is on such entities to operate in a balanced way.

He said entities in the sector ought to have the right intent while coming out with offerings and robust governance for the orderly growth of the sector.

"There is no sure-fire way to regulate the fintechs in a manner that maximises their positive impact while simultaneously protecting the financial system and customers against the risks," Choudhary said speaking at the Global Fintech Fest here.

"If the goal is protecting and furthering the interest of customers and orderly development of the financial system then the actor of the great balancing act has to be the fintech sector itself," he said.

"I believe be in life or in business, balance comes from focusing on the right things. In my opinion it cannot come only from regulation. Regulation can only be a supporting constituent while fintech themselves have to drive the great balancing act," he added.

Choudhary said he would prescribe the fintech players to focus on customer centricity and governance, and not look at the latter as merely compliance.

The comments come at a time when the RBI has been upping its focus on the fintech sector and its recently released guidelines on digital lending apps have caused a flutter with some entities expressing concerns. Earlier, Choudhary said regulators' key role is to find a balance and added that sustainability is about balancing the needs of the future with the wants of today.

Acknowledging that there is a tech-based transformation across the globe at present and that contribution of fintechs is phenomenal and satisfying, Choudhary said, "we also need to be mindful about the risk and safeguard the financial system".

"We are working on developing an appropriate framework for developing the fintech ecosystem to ensure innovation balanced with the stability of the financial system," he said. He said the fintech players need to avoid loss to customers, refrain from imprudent lending, avoid discrimination or biased outcomes, minimize adverse outcomes, financial integrity and manage customer experience.

An entity must attempt to be transparent, and making and sharing key fact statements with customers will be a key aspect for customers going ahead,

he added.