The Delhi High Court on Wednesday sought a response from the Centre on a plea seeking directions not to permit TechFins to enter or operate into the financial sector without establishing registered offices within the territory of India and without prior registration/approval from financial regulators in India.
The petitioner submitted that Indian Financial Regulators permit unregulated operations of global tech companies such as Facebook, Google and Amazon and others in the financial sector. It can adversely disrupt the financial services and financial stability of the country and, therefore, the formulation of adequate regulation for such non-financial firms offering financial services generally referred to as TechFins to operate in the financial sector is the need of the hour for the protection of customers and financial stability of the country.
The bench led by Chief Justice DN Patel and Justice Prateek Jalan has issued notice to the Ministry of Law & Justice & Finance, Reserve Bank of India, National Payments Corporation of India, Insurance Regulatory and Development Authority of India, Securities and Exchange Board of India & Pension Fund Regulatory & Development Authority.
The petitioner has sought directions to immediately formulate comprehensive, detailed and strict legal framework for “entry” as well as “operations” of “TechFins” in the financial sector in India through any mode/mechanism, (including partnering with existing registered financial entities). It has also sought directions for formulation of legal framework for statutory audit of TechFins and to take action against those entities, in case, it violates the legal framework.
The petition has been filed by Dr. Resmi P. Bhaskaran through Advocate Deepak Prakash. The petitioner is a trained professional and practising as Applied Economist specialised in Policy Research, Financial knowledge Management, and Strategy Development and has experienced of more than two decades in this field.
The petition averred that the lackadaisical approach of the regulatory authorities allows for an incredible increase in risks for society in the financial services market. Besides the fact that the customers are less protected with this approach, it also creates an uneven playing field between regulated and unregulated entities. It is further submitted that continued unregulated operations of TechFins in the financial sector can lead to a financial catastrophe which may lead to a national financial crisis and mass leakage of personal data.