Plans by Big Tech to foray further into India’s financial sector pose risks for traditional banks as the tech firms have the potential to change into dominant players in financial products and services, the central bank said.
The plans will also create governance-related challenges for regulators, the Reserve Bank of India (RBI) wrote in its bi-annual financial stability outline on Thursday.
Major technology firms “straddle many different lines of trade with once in a while opaque overarching governance structures,” it said.
The RBI said concerns included operational risks, too-big-to fail issues, challenges for antitrust rules, cybersecurity, and data privacy. But it added that positive outcomes could include efficiency gains and more access to financial products and services.
Amazon and Google currently supply basic payment products and services in India. Both companies as polite Facebook and others have applied for licences to function broader retail payment and settlement systems in partnership with Indian companies such as Reliance and lenders.
The central bank’s warnings come at a time of much tension between the Indian government and US tech giants over issues that range from e-commerce rules to data privacy and satisfied posted on their platforms. Amazon, Facebook, Facebook-owned WhatsApp, and Twitter have all been caught up in disputes with New Delhi.
India’s largest state-run bank and UNI Global Union which represents approximately 20 million workers globally final month also raised concerns approximately the entry of large tech companies into the country’s payments sector.
© Thomson Reuters 2021