RBI urges fintech firms to set up self-regulatory body soon

livemint.com:

Mumbai: Reserve Bank of India governor Shaktikanta Das on Wednesday asked fintech players to set up a self-regulatory organization within a year. Speaking at the Global Fintech Fest, Das said fintech companies need an effective self-regulatory structure. “They (fintech companies) need to evolve industry best practices, privacy and data protection norms in sync with the laws of the land, set standards to avoid mis-selling, promote ethical business practices, transparency of pricing, etc.

I would like to use this opportunity to urge and encourage the fintechs to establish a self-regulatory organization (SRO) themselves," he said. On Tuesday, RBI deputy governor Rabi Sankar also spoke of the need for an SRO. This is a clear shift from the earlier stance of the central bank that fintech firms need to be regulated.

Das said customer centricity, governance and self-regulation are three critical issues for the fintech sector. He asked these companies to use simplified user interfaces and quick customer grievance redressal mechanisms to help build the trust of customers. “To focus on customers means embracing a customer-centric approach to innovation by understanding the needs of customers, making provisions that protect customer interests and earn their trust," he said.

“Avoiding customer harassment is essential to achieving long-term customer trust." Speaking on the rising instances of breach of data privacy and harsh recovery practices by illegal loan apps, Das said there is an urgent need to ensure that innovations are accompanied by prudential safeguards and responsible conduct. Das also asked fintech players to proactively adopt high standards of governance. “Effective governance in fintechs requires a collaborative effort