Financial Operations Of FB, Google, Amazon Regulated: RBI Tells Delhi HC

In response to a petition filed by Resmi P. Bhaskaran through advocate Deepak Prakash claiming that unregulated operation of techfin entities in the financial sector can lead to financial crisis and leakage of personal data, the apex bank said: “NPCI (National Payments Corporation of India) has, accordingly, allowed Amazon under the single sponsor bank model of UPI, Google and WhatsApp under the multi-bank model to operate as Third Party App Providers (TPAPs).”

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Informing that operations of firms such as Facebook, Google and Amazon in India’s financial sector space are being regulated under the relevant laws, the Reserve Bank of India (RBI) told the Delhi High Court they have been permitted to function only after necessary compliances.

In response to a petition filed by Resmi P. Bhaskaran through advocate Deepak Prakash claiming that unregulated operation of techfin entities in the financial sector can lead to financial crisis and leakage of personal data, the apex bank said: “NPCI (National Payments Corporation of India) has, accordingly, allowed Amazon under the single sponsor bank model of UPI, Google and WhatsApp under the multi-bank model to operate as Third Party App Providers (TPAPs).”

The “lackadaisical approach” of Indian financial regulators permits unregulated operation of techfin firms and claims that this could adversely affect the financial stability of the country, alleged Bhaskaran.

The apex bank asserted it also has authorised various non-bank companies over a period of time to issue and operate semi-closed prepaid payment instruments (PPls) in India in accordance with its powers under the Payment and Settlement Systems (PSS) Act, 2007.

“Amazon was one such non-bank company which was authorised on March 22, 2017 to issue and operate a semi-closed prepaid payment instrument in India. Thus, in addition to being a TPAP under UPI, Amazon also operates a digital wallet (a form of PPI),” the top bank said.

The RBI informed that there were, with the increase in intermediation and rapid adoption of technology, growing concerns about the unregulated players capturing customers’ personal information while carrying the payment transaction messages, adding the apex bank, therefore, considered it important to have unfettered supervisory access to data stored with the system providers as also with their service providers, intermediaries, TPAPs and other entities in the payment ecosystem.

The country's apex bank told the High Court that in tune with the same a circular was issued on April 6, 2018, mandating all system providers to ensure the entire data relating to payment systems operated by them is stored in a system only in India.

Attributing the communications received from NPCI, the RBI said Amazon complied with its 2018 circular in November 2018 while Google Pay had complied by January 2020 and WhatsApp by June 2020.

Stating while it regulates and supervises NPCI and PPI issuers like Amazon, the apex bank asserted the statement made by the petitioner that techfins despite being unregulated, are providing core banking activities by partnering with financial institutions, is totally baseless and unfounded. 

“Such entities do not provide any core banking activity other than acting as an authorized payment system operator or providing interface to customers for linking to UPI system or acting as co-branding partner to an existing regulated entity,” the top bank said while also mentioning in its affidavit that it has also taken steps to bring the payment aggregators under the regulatory fold.

The Securities and Exchange Board of India (Sebi) on its part said it has constituted a Market Data Advisory Committee to recommend appropriate policy for access to securities market data, identify segment wise data perimeters, data needs and gaps, recommend data privacy and data access regulations.