Shirish Chandra Murmu, Deputy Governor of the Reserve Bank of India (RBI), stated on Friday that the central bank's goal is not for fintech companies to resemble banks, but rather to ensure that organizations performing critical financial functions effectively manage risks.
During the Global Fintech Fest in Mumbai, he emphasized that 'similar activities creating comparable risks should be subject to similar regulatory scrutiny under appropriate circumstances.' Furthermore, he mentioned that the central bank is considering feedback from non-banking financial companies regarding a proposal to offer them only term loans with a predefined repayment schedule.
According to this proposal, approved limits cannot be restored after repayment, which effectively excludes flexible lending products that allow borrowers to repeatedly draw and repay the same credit line. Murmu noted that while this proposal might affect the short-term revenue models of some fintech companies, adherence to these rules is a key condition for sustainable growth and capital attraction.
He also stated that regulation and innovation are not mutually exclusive forces. In his view, 'regulation creates confidence for scaling innovations, and responsible innovation gives regulators confidence in allowing space for experimentation.'
Technology and Regulation
Murmu believes that fintech companies often perceive regulation as compliance costs; however, strong governance, cybersecurity, responsible data handling, and consumer protection can become competitive advantages as Indian fintech companies expand abroad.
He added that 'technology should expand the boundaries of formal lending, not just make existing lending faster. The goal cannot merely be to accelerate lending; it must also be to improve the quality of lending.'
The Deputy Governor stressed the importance of accountability, noting: 'Partnership models are valuable, but the regulated entity remains responsible for services provided on its behalf. Technology can distribute the service, but it cannot distribute the responsibility.'
He pointed out that technological accountability will become even more significant as algorithms begin to influence lending decisions. Models can perpetuate historical bias, generate economically unsound outcomes, or make decisions that are difficult for customers to explain. Murmu asked: 'When an algorithm makes or significantly influences a financial decision, who is responsible? The answer cannot be the algorithm itself.'
As finance becomes automated, human accountability must strengthen, not weaken. Murmu also raised new regulatory questions concerning how artificial intelligence (AI) transitions from analysis and recommendation systems to agents capable of planning and executing actions with limited human intervention.
He posed the questions: 'Who is responsible when an agent acts incorrectly? How can we ensure it acts in the client's interest, not the institution's?' Murmu noted that institutions must have the ability to oversee machine-speed systems. He clarified that these are not arguments against agentic AI, but 'arguments in favor of responsible agentic AI,' referring to AI systems that can independently plan, execute, and adapt multi-stage tasks without direct human prompting.
Digital Payments
The scale of India's digital payments ecosystem generates risks. Murmu stated that 'scale changes the nature of risk,' and called for payment systems to be designed with stress scenarios in mind, including reserving, business continuity, incident response, and recovery, integrating these elements into the system's architecture and management.
He insisted that fraud must be viewed increasingly as an ecosystem-wide problem affecting banks, payment operators, fintech companies, telecom providers, and law enforcement agencies. According to Murmu, 'the measure of success for a payment system is not just the number of transactions it processes per second. It is the trust embedded in each of those transactions.'
The Deputy Governor also noted that the next phase of digital finance must focus on clients who remain outside the system, including those facing barriers related to connectivity, digital literacy, language, or accessibility. He urged the industry to treat inclusivity as a design requirement, not an afterthought, asserting that 'a system built for the most complex case almost always serves everyone else.'
Finally, he strongly urged Indian payment service providers and network operators to begin preparing for quantum computing—a technology that could compromise the cryptographic foundations of the modern financial system. Murmu concluded: 'It is time for providers and network operators of Indian payment systems to start transitioning to quantum-resistant payment systems.' He added that 'quantum resilience is the capability of the entire ecosystem, not just one institution.'