For fintech founders in India, RBI is nothing short of a nightmare but that actually might not be the case! With my limited experience in Fintech, I thought I would write something about deconstructing RBI's thought process. What are they like? What drives them? What are their objectives? etc etc etc...
The closest analogy I can think about RBI is your girlfriend's father. Consumers or the Indian Citizens are their daughters.
#1 Consumers are always first and foremost
For a girl's father, their daughter is first and foremost. RBI is aware that a majority of the citizens are financially illiterate and poor. There will be a huge interest in making quick money from them and duping them. This is one of the reasons why they have not allowed cryptocurrencies available to everyone.
The amount of MLM scams that happened in 2016-17 hurt the lowermost strata of the society the most. People invest their entire earnings for quicker returns and end up losing it. RBI wants to protect such naive investors!
Or take 2FA (two-factor authentication). No user minds them and it has resulted in the lowermost chargebacks across the globe!
#2 Democratising financial institution is imperative for national security
RBI takes the onus of driving financial security and like any other gatekeeper institution in India treats them at par with national security. I am not talking about economic growth but security here. The Govt didn't want wallets or cards owned by private or public shareholders to become dominant, so launched UPI. UPI is although run by NPCI, a non-govt entity but acts like a quasi govt entity. UPI has killed the moats for wallet and other payment instruments and India now has its own world-class payment infrastructure.
#3 Hard taskmaster but open to new ideas
RBI is a hard taskmaster but that doesn't mean they are not all open to new ideas. In the end, RBI knows that inclusion, literacy and wellbeing can be made possible by involving stakeholders at all levels but they prefer to go slow. They do view startups skeptically but never block startups and new ideas. But they want to test them before rolling them out to the masses. Just think about this - The amount of digital transactions in India has overtaken China's digital transactions! RBI is really like your girlfriend's father - want to really really test you before complying!
Pls share your feedbacks and comments guys. Did you like the writing style or anything to add on the content.
- Gattu
twitter.com/rohitgattani