MUMBAI: Big Internet’s plans to expand into India’s financial sector pose a risk to traditional banks, according to the central bank, because the tech firms have the potential to become dominant players in financial services. Regulators would face governance issues as a result of the plans, according to the Reserve Bank of India (RBI) in its bi-annual financial stability report released on Thursday.
According to the report, major technology companies “straddle numerous distinct lines of business with often opaque overarching governance frameworks.”
Operational risks, too-big-to-fail issues, antitrust challenges, cybersecurity, and data privacy are among the RBI’s concerns. However, positive impacts could include increased efficiency and access to financial services, according to the report. In India, Amazon.com Inc. and Google presently offer basic payment services. In conjunction with Indian corporations such as Reliance and lenders, both companies, as well as Facebook and others, have applied for licenses to operate broader retail payment and settlement systems. The central bank’s warnings come at a time when the Indian government and American digital firms are at odds over topics ranging from e-commerce regulations to data privacy and content uploaded on their platforms. Disputes with New Delhi have engulfed Amazon, Facebook, Facebook-owned WhatsApp, and Twitter.
Last month, India’s largest state-run bank and the UNI Global Union, which represents over 20 million workers worldwide, expressed alarm about large digital corporations entering the country’s payments sector.
(Nupur Anand contributed reporting, and Edwina Gibbs edited the piece.)/n
