Fintech companies in talks to decide on rules for self-regulation

The RBI proposed the creation of a self-regulatory organisation (SRO) in March during a conference hosted by the Department of Payment and Settlement Systems

Deeply influenced by the country's ever-changing regulatory landscape, digital payment players are negotiating the formation of a self-regulatory organisation (SRO) to develop uniform rules and standards of operation for their industry, an Economic Times report said.

 

The Reserve Bank of India Governor Shaktikanta Das proposed the creation of an SRO in March during a conference hosted by the Department of Payment and Settlement Systems. But, after more than a month, the corporations have yet to move beyond preliminary discussions to form a partnership and lay the foundation.

 

According to the report, the Payments Council of India (PCI), an industry association representing payment firms, intended to take on the role of an SRO. However, the central bank objected to the proposal as the PCI includes a number of unregulated firms. The council is a subsidiary of the Internet and Mobile Association of India (IAMAI), which includes members such as Facebook, Google, and Amazon.

 

"The RBI wants all regulated payment companies to come together and form a single SRO," a founder of a platform told ET on condition of anonymity.

 

Given the payments industry's diverse players, such as UPI apps, mobile wallet businesses, ATM service providers, clearance corporations, business correspondents, and others, forming a self-regulatory body is a difficult undertaking.

 

"There are very few conversations that happen between each segment of the payments industry. Bringing all of them together under a single umbrella will take time and will be difficult", another founder of a large payment company told the ET.

 

The PCI has committed to driving this at the Kochi meeting, sources said, adding that even if they are unable to become members of an SRO, the body's top executive committee members can take the initiative to bring the sector together.

 

Other industry organisations, like the Confederation of ATM Industry and the Business Correspondents Federation of India, are also planning to apply for an SRO, according to sources.

 

Much of the payments business grew in an unregulated fashion. While the RBI granted prepaid payment instrument licences for consumer payments, payment aggregators and gateways lacked such a mechanism till recently.