- Due to the evolvement of new technology one side, will provide better access and services for the end-users but on another side, they will also create a threat to the consumer related to cyber security so RBI wanted to design such a framework that protects the consumer integrity and privacy.
- To mitigate such type of risk there is a need to careful choice of technology and frameworks. which not only provides a hassle-free experience but also keeps the application security in the financial service industry.
- As per the Central bank, the approach will have to balance innovation with regulation, without compromising on any of the principles of risk management.
- Generally, there are three types of risks faced by Fintech or BigTech entities like systemic risks, operational risks, and risks affecting competition, RBI has already warned many companies against these kinds of risks while entering the market.
- Many steps have been taken to deal with like regulatory sandbox, the establishment of the Reserve Bank Innovation Hub, conducting hackathons, and also setting up a fintech department.
- Apart from that, there is a proper need for legislation and regulations for the fintech sector, which is as tightly regulated as traditional banks to nurture the innovation and mitigate any associated risks.
Question:
Q.1 RBI decided to design a policy framework for which of the following sectors?a. Traditional Banking
b. Non-Banking Entities
c. FInTech or BigTech Entities
d. Payment settlements
