The fintech sector in India has been at the forefront of receiving funding from marquee investors. The Reserve Bank of India (RBI) has recently established a fintech department to promote the sector through innovations and provide an undivided focus.
The regulatory body formed the first fintech division in 2018. Later, in 2020, it was transferred to the department of payments and settlements system (DPSS) because most fintech activities and businesses were in the ‘payments’ category. Considering the fintech landscape is always transforming, the new department, a spin-off from DPSS, will monitor regulations, identify opportunities & challenges, provide a research framework, as well as assist the RBI with policy formation.
Subrata Das, Chief General Manager-in charge at RBI in an internal circular stated, “All 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 falling under the purview of the Bank, will be dealt with the fintech department. All matters related to inter-regulatory coordination and internal coordination on fintech shall also be dealt with by the Department.” The fintech department will be effective from January 5, 2022, however, it has yet to be added to the directory of the RBI’s 30+ departments.
According to reports, the department would be led by Ajay Kumar Choudhary, one of the RBI’s executives directors. Choudhary has almost three decades of expertise at the RBI in areas such as supervision, currency management, regulation, payments, and settlements, among others. He was recently elevated to his current position; he was formerly the top GM-in-charge of the supervision department. Choudhary, a Delhi University graduate, has previously worked for NABARD and headed the Bank of Mauritius for a short window. He is also on the board of the Bank of India.
Some reports also suggest the central bank is working on two types of CBDCs: wholesale and retail, as well as the new department will be responsible for managing their development. The Reserve Bank of India, and particularly its governor, Shaktikanta Das, has been one of the most outspoken critics of cryptocurrency in India. Das has often warned against the use of private cryptocurrencies in the country and has expressed concern regarding the increasing amount of wealth being invested in crypto-trading in India. While there is no definitive estimate of the total number of crypto traders and users in India, the country’s major crypto exchanges and trading platforms claim to have millions of users.