Yesterday, a notice was issued by the Delhi High Court in a PIL that sought directions to be issued to the Central Government and Reserve Bank of India asking them to frame proper guidelines to regulate entry and operation of “TechFin” companies in the financial sector, for example, Facebook, Google, Amazon. (Dr Resmi P Bhaskaran vs UOI &Ors)
Along with the Centre and RBI, the responses of SEBI, Insurance Regulatory & Development Authority of India, National Payments Corporation of India and Pension Regulatory & Development Authority of India were also sought by the petition. The matter was addressed by a Division Bench of Chief Justice DN Patel and Justice Prateek Jalan. Dr Resmi P Bhaskaran, the petitioner has claimed to be a practicing applied economist. According to the petition, the existing approach of finance regulators in India is “lackadaisical” due to their allowance of “unregulated” operation and the entry of global tech corporations.
The petition submitted that tech giants, i.e. non-licensed financial institutions have gained entry into financial domain through partnerships with existing entities due to the absence of appropriate regulations. They can now compete with regulated financial institutions in various areas, without having to observe the same regulations.
The petition also adds that TechFins like these are do not abide by any client/customer/investor protection rules or regulations that exist to ascertain the prevention of build-up systematic risks.
Additionally, issues of data privacy were emphasised, and the petitioner also claimed that an undue advantage is possessed by TechFin institutions that own very accurate, detailed and extensive digitised data about customers. This gives them an advantage over the more traditional financial institutions as these factors can influence the decision of customers.
The petition makes requests for a stringent and robust framework to be provided for the entry and operation of TechFins. The counsel for the petitioner was Advocate Deepak Prakash. The next hearing of the matter would be on 29th January.