India’s central bank, the Reserve Bank of India (RBI), has established a fintech department to promote innovation in the fintech sector, as well as identify the challenges and potential brought on by the fast-growing sector.
The RBI is the country’s central bank and regulatory body responsible for the issue and supply of the Indian rupee. It is also responsible for the regulation of the Indian banking system.
The official date of the department’s creation is January 4, 2022.
The RBI released a statement detailing the new developments.
“With a view to give further focus to the area and innovation in the fintech sector in keeping pace with the dynamically changing landscape, it was decided to set up a fintech department in the bank,” the release stated.
“The department will also provide a further framework for further research on the subject that can aid policy interventions by the Bank. Accordingly, all matters related to the facilitation of constructive innovations and incubations in the fintech sector, which may have wider implications for the financial sector/markets and falling under the purview of the Bank, will be dealt with the Fintech Department. All matters related to inter-regulatory coordination and internal coordination on fintech shall also be dealt with by the Department,” the statement continued.
The new decision follows recent reports questioning the efficiency and long-term commitment of the RBI when it comes to crypto regulations.
The RBI is currently working on two types of central bank digital currencies (CBDC), wholesale and retail. The newly established department will focus on overseeing the development of the CBDCs.
Ajay Kumar Choudhary is tasked with overseeing the department after he was appointed by the RBI as executive director.
According to Choudhary, he “will look after Fintech Department, Risk Monitoring Department and Inspection Department.”
The new developments come as the RBI looks to allocate more resources and focus to the fintech sector, which is crucial given India’s slow implementation and initiatives aimed at solving fintech challenges.
Vivan Sharan is a technology expert who previously worked with the government.
“It’s a positive signal of intent to build real regulatory capacity to oversee the fast-paced fintech industry,” said Sharan.
“It is also a reflection of the central bank’s desire to deepen digital payments through a focus on innovation, and a recognition of the growing importance of various forms of digital money that will require supervisory bandwidth,” Sharan continued.
The newly established fintech department is a big step forward for the nation as it tries to become a bigger player in this ecosystem.