Big tech financial services game poses systemic problems like over-indebtedness: RBI Governor Shaktikanta Das

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RBI Governor Shaktikanta Das said on Friday that the entry of big tech companies into the financial sector poses systemic problems such as over-indebtedness at the ends of borrowers.

The entry of companies like Google, Amazon and Facebook (Meta), labeled as big tech companies, also raises questions about competition and data privacy.

“They (big tech) carry risks, which need to be properly assessed and addressed,” Das said during a keynote at the 2022 Modern BFSI Summit hosted by Financial Express.

These companies can include e-commerce entities, search engines and social media platforms that have started offering financial services in a “big way” on their own or through matchmaking, he said. , adding that this is leading to the use of new credit scoring methodologies.

“Such large-scale use of new credit assessment methodologies can create systemic problems such as over-indebtedness, inadequate credit assessment and other similar risks,” he added.

Das said the deployment of harsh recovery methods like calling at odd hours or using foul language is ‘unacceptable’ and assured that the RBI is giving ‘serious attention’ to such events to ensure the necessary action is taken. are taken to curb these activities.

He said most of these cases are reported by unregulated entities, but added that the central bank has also come across such tactics used by RBI-regulated entities, and urged all players to pay attention to them. particular.

The comments came at a time when there have been allegations of suicides by many borrowers triggered by harsh recovery practices by officers.

The central bank will continue its role of promoting innovation while trying to contain systemic challenges, he said, adding that the RBI will soon release a discussion paper on digital lending.

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