Big technology companies like Google, Amazon and Facebook pose systemic concerns such as over-leverage: RBI manager Shaktikanta Das

On Friday, RBI Governor Shaktikanta Das said the entry of large technology companies into the financial sector raises systemic concerns such as over-leverage by borrowers. The entry of companies such as Google, Amazon and Facebook (Meta), called big technology companies, also calls into question competition and data privacy.

“They (big technology) carry risks that need to be properly assessed and treated,” RBI Governor Shaktikanta Das said as he spoke at the Modern BFSI Summit 2022, hosted by Financial Express.

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Such companies could include e-commerce entities, search engines and social media platforms that have started offering financial services “in a big way” on their own or through links, he said, adding that this leads to the use of new methodologies in credit assessment. .

“Such large-scale use of new methodologies in credit assessment could create systemic concerns such as over-leverage, inadequate credit assessment and other similar risks,” he added.

Dass said the use of harsh recovery methods, such as calling in odd hours or using obscene language, was “unacceptable” and assured that the RBI was paying “serious attention” to such events to ensure that the necessary steps were taken to restriction of such activities.

He said most of these cases were reported by unregulated entities, but added that the central bank had also encountered similar tactics used by entities regulated by the RBI, and called on all players to pay special attention to the same.

The comments come at a time when there are allegations of suicide by many borrowers caused by harsh recovery practices by agents.

The central bank will continue to play its role in fostering innovation while trying to address systemic challenges, he said, adding that RBI will soon issue a discussion paper on digital lending.

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