What happens when regulators decide to play God

Wallets, payments banks and a cautionary tale from India’s fintech ecosystem

India’s Reserve Bank, borrowing from a Committee of experts, believed the PPI model presented a “contagion risk”

It floated payments banks as an alternative, but both wallets and payments banks are now floundering

Sectoral regulators like the RBI lack understanding of competition and innovation dynamics

It’s important that Parliament hold the RBI accountable

India may be one of the world’s most active fintech markets, with EY’s Fintech Adoption Index 2017 even rating India as the nation with the second highest rate of fintech adoption. But behind the arc lights, there’s a bottomless void filled with many players.

In March, mobile wallets saw their value of transactions plummet 23% in just one month. Though official data isn’t available for the month of April, anecdotal conversations paint a gloomy picture for mobile wallets as usage continues to plummet on account of the Reserve Bank of India’s (RBI) stringent Know Your Customer (KYC) norms.

AUTHOR

Mandar Kagade

A policy wonk and a lawyer (in that order), Mandar Kagade is focussed on the development of regulatory policy in connection with the payments ecosystem. He is passionate about exploring intersections of finance and policy.

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