The process of new legislation has begun in full earnest. Some issues are thorny, for instance the stress on data localisation will weigh on service providers and may increase costs. In fact, while framing rules, it is crucial that the government remembers not to overburden service providers with mandates that will hit innovation. Regulatory overload can backfire on the objective of financial inclusion, as servicing low income customers may become less attractive.
Meanwhile, Payments Banks are running into trouble as RBI has found instances of the banks running afoul of regulations. While Airtel Payments Bank was earlier barred from adding new customers, now Fino and Paytm face restrictions. Fino has had accounts with balances greater than the stipulated INR one lakh and Paytm has had e - KYC issues - See Bloomberg Quint, August 1, 2018. The RBI needs to evaluate the reasons behind the non - compliance and have an open mind to reviewing the regulations, if needed. Disruptions in a new business raise uncertainty and do not serve the purpose of financial inclusion.