The RBI informed the Supreme Court of Delhi that the operation of techfin firms such as Facebook, Google and Amazon in India’s financial sector is regulated under applicable laws and allowed to operate only after the required compliance.
A similar stance was taken by market regulator Sebi who said there were already enough provisions in place to provide compulsory registration for any business entering the security market.
The Securities and Exchange Board of India (Sebi) also states that it has established a Market Information Advisory Committee to “recommend the appropriate policy for access to security market information, to identify smart data percentages, data requirements and spaces, to promote data privacy and access systems, etc.”
Sebeb’s presentation to the Reserve Bank of India was made in response to PIL seeking a detailed legal framework to regulate the operation of techfin companies such as Facebook, Google and Amazon in the Indian financial sector.
The RBI said the decision to allow businesses to operate on Unified Payments Interface (UPI) is taken only by the National Payments Corporation of India (NPCI) which has set the system rules, guidelines and procedures governing the payment system of the UPI
“NPCI, therefore, has allowed Amazon under a single subsidiary banking system UPI, Google and WhatsApp under a multi-bank system to operate as Third Party App Provider (TPAPs) providers,” the RBI said in its affidavit. official application P Bhaskaran.
Bhaskaran, in his petition filed by attorney Deepak Prakash, alleges that the “negligent approach” of Indian financial regulators allows for uncontrolled operation of techfin firms and says this could undermine the country’s financial stability.
Contradicting the claims in the application, the RBI has also authorized various non-banking companies for a period of time to issue and use prepaid payment systems (PPls) in India in accordance with its powers under the Payment and Settlement Systems (PSS) Act, 2007.
“Amazon was such a non-banking company authorized on March 22, 2017 to issue and use a prepaid payment tool in India. Therefore, in addition to being a TPAP under UPI, Amazon also has a wallet (a. Form PPI), “he said.
The RBI went on to say that “with the increase in mediation and rapid adoption of technology, there has been growing concern about uncontrolled players (payment gateways, payment aggregators, technology service providers, etc.) capturing customer personal information while handling payment transaction messages”.
Therefore, the RBI has seen the need for unrestricted access to data management with system providers as well as their service providers, mediators, TPAPs and other organizations in the payment system and issued a circular on April 6, 2018, “authorizing all system providers to verify that all information relating to payment systems used by them is kept in the system only in India “.
“This data should include the full details of the transaction up to the end, the information collected, collected, processed as part of the message or payment order,” he said.
The RBI further stated that with the NPCI acquisition, Amazon complied with its 2018 circular in November 2018, while Google Pay complied with it in January 2020 and on WhatsApp in June 2020.
The country’s central bank also said that while it regulates and directs NPCI and PPI issuers such as Amazon, it does not grant authorization or authorization to TPAPs governed by NPCI rules and guidelines installed by NPCI for the UPI payment system.
It also said it had also taken recent steps to bring payment aggregators under regulatory control.
On the other hand, since payment methods do not carry funds, the recommended technology-related basic methods have been put in place,” the affidavit said.
Bhaskaran, in his plea, requested that the unregulated operation of techfin businesses in the financial sector could lead to financial crisis and leakage of personal information.
It says these companies “have a deep data source and a global network established” that gives them an opportunity in the financial sector.
However, “they are not subject to customer / customer / investor protection laws or regulatory measures that ensure financial market performance and prevent systemic risk formation”, the complaint was disputed.