RBI to establish new fintech department
By siliconindia | Monday, 10 January 2022, 03:28 Hrs
After setting up a financial technology unit back in 2018, the Reserve Bank of India (RBI) said it will now put together a separate fintech department in view of the segment’s rapidly changing landscape.
In an internal circular, the central bank said it decided to set up the department to further focus and facilitate innovation in the Indian fintech sector. “Accordingly, a new department has been created with effect from January 4, 2022, by subsuming the fintech division of DPSS, CO. The department will not only promote innovation in the sector, but also identify the challenges and opportunities associated with it and address them in a timely manner,” RBI said in the circular.
DPSS is the department of payment and settlement systems, which works on policy formation and authorisation of payment and settlement system operators in the country, among other things.
Along with identifying challenges and opportunities, the new fintech department will also provide a framework for further research on the subject that could aid policy interventions by the central bank, RBI said in the circular, as per a review.
“Accordingly, if matters related to the facilitation of constructive innovations and incubations in the fintech sector, which may have wider implications for the financial sector/markets and fall under the purview of the Bank, will be dealt with by the fintech department,” it said.
According to the central bank, the fintech department will be administratively attached to the centralised administrative division (CAD) of the central office.
The fintech sector has faced several regulatory changes as new-age startups enter the financial services sector. Last month, RBI extended the deadline for card tokenisation—from January 1, 2022, to June 30, 2022—after several companies and industry bodies said they needed more time to make the necessary changes.
As part of the new rules, online merchants are barred from storing card details of users on their platforms. This is meant to curtail online payment fraud, but will also increase friction in online payments with users having to re-enter their card details for every purchase.
Prior to that, in October, card-based recurring payments saw disruption, with customers having to reauthorise standing instructions for recurring payments or online subscriptions up to Rs 5,000.
In 2020, the central bank released a framework for new umbrella entities (NUE) to increase competition in digital payments. The decision saw several industry heavyweights from Tatas to Reliance, and new-age companies such as Paytm and Ola, apply for the licence.
Recently, RBI also made the decision to allow payments of up to Rs 200 to be made through offline channels, without the need for an active internet connection.