A scope exists for full-service digital banks in the future: SC Garg
New Delhi, September 17 (PTI) Former finance secretary Subhash Chandra Garg said on Friday that the new era of neo-banking banking should be regulated and it is possible to license full-service digital banks in the future. .
Highlighting the difference between fintechs and the new, fully digital, branchless banks, he said that while the former is payments related and regulated, the latter is about credit and is unregulated.
He said that while many countries have licensed new fully digital, branchless banks, Indian regulations are still against this.
India has an extremely fragmented banking system on the credit side, which requires a lot of regulations.
“I think we have to think that in the digital space, these kinds of constraints will make digital banking a little less exciting,” he added.
“We have no law to define or establish a basic principle or law relating to credit management. We only have that on the payments side. We have the payment settlement law which regulates payments.” , he said during a speech at an Assocham webinar on neobanking.
This makes it easier for the Reserve Bank to license fintech companies, he added.
“But suppose that tomorrow the Reserve Bank says to authorize the neo-banks, without giving them a banking license … then under what law the Reserve Bank authorizes or regulates them, there is nothing,” he said. -he adds.
Garg suggested, “We should come up with some kind of legislation to define and regulate credit … have a regulator for them.”
The former finance ministry official also said that at some point India is expected to allow full-service digital banks. PTI KPM MKJ
Disclaimer: – This story has not been edited by Outlook staff and is auto-generated from news agency feeds. Source: PTI