Dominance of PhonePe and GPay, Uday Kotak, a long-serving banker, expressed alarm on Friday about Google Pe and Phone Pe’s dominance in the payments industry. While banks were taken off guard, he believes authorities should consider the matter from the perspective of financial stability.
Kotak claimed that Indian banks have been behind the pace; allowing Google Pay and Walmart-owned Phone Pe to monopolise the growth of UPI payments.
A Wake-Up Call
It’s a wake-up call for Indian banking; if you don’t, you’ll lose a significant portion of your market. “From the perspective of policy and financial stability, which policymakers must consider,” Kotak added. In the last two years, according to Kotak, bankers have been blind.
Consumer tech businesses have revenue models outside of finance, according to Kotak. “Take the e-commerce business model, for example. Non-financial businesses are prohibited by section 6 of the Banking Regulation Act. “How we draw the boundary is a critical issue, and there is also a financial stability concern,” Kotak said.
The country’s third-largest private bank’s CEO also alluded to Google Pay’s deposit-raising efforts and the central bank’s decision to prohibit lending platforms from providing first-loss default guarantees. He stated that it was necessary to determine; who was in charge of the deposits and who was liable for the loan assets’ risk.
According to Kotak, a battle between a regulated institution and a fintech or consumer tech company usually results in the tech company being more flexible with regulations and winning market dominance quickly. “I’m not anti-competition; all I’m saying is that in the name of providing competitive service, we don’t have a systemic and stability challenge at the same time,” he remarked. He encouraged authorities to expand the use of the Unified Payment Interface and Aadhaar-enabled payment systems worldwide. He stated that while a collaboration with Singapore already exists, there is a need to expand this to other growing areas such as Bangladesh and Africa.
One thought on “The dominance of PhonePe and GPay wake-up call for banks”
[…] What is the background of this worldwide renowned fast-food chain? “Although flatbread with toppings has been consumed for ages in ancient […]