Mumbai: Reserve Bank of India Governor Sanjay Malhotra has urged fintech companies to treat customer data as a fiduciary responsibility rather than a business asset, warning that misuse could quickly damage consumer trust.
Speaking at the Global Fintech Fest in Mumbai, Malhotra also cautioned fintechs against building businesses around gaps between regulatory categories and seeking regulatory clarity only after scaling operations.
Customer Data Needs Protection
Malhotra said every fintech holds personal information belonging to real people and should handle it like a trustee managing assets for beneficiaries.
Data should be collected for a clear purpose, used strictly within the consent provided by customers and protected with the same care companies would apply to their own information.
He warned that when firms treat customer data primarily as a monetisable asset rather than a responsibility, trust can erode and may be difficult to restore.
Don’t Exploit Regulatory Gaps
The RBI Governor cautioned companies against structuring businesses around regulatory loopholes or expanding rapidly before seeking clarity from regulators.
He pointed to regulatory sandboxes and pilot mechanisms as better routes for fintech companies seeking to test innovations.
Transparent engagement with regulators, he said, can generate regulatory goodwill while creating faster and more durable pathways for growth.
Growing Firms Face Bigger Responsibility
Malhotra also stressed investment in operational resilience, cybersecurity and business continuity as fintech companies expand.
Companies whose payment volumes, lending books or user bases become large enough to affect the financial system carry responsibilities extending beyond shareholders and balance sheets.
He described such businesses as not merely “too big to fail” but “too significant to be careless”.
AI Risks Need Attention
Malhotra said artificial intelligence creates risks including opacity, bias, exclusion, cybersecurity threats, data privacy concerns and erosion of human judgement.
While fintechs remain outside prudential regulation to avoid burdening early-stage innovation, these emerging risks need mitigation.
Malhotra also announced the Unified Fintech Forum as the fintech sector’s second self-regulatory organisation, saying the RBI has granted the necessary approvals.
