‘Rise in digital payments creating new risks’

Mumbai: The success of Unified Payments Interface (UPI) and mass adoption of digital banking and e-payment services has given rise to new concerns for the RBI. The central bank is seeing unbridled engagement of third-parties, mis-selling, breach of data privacy, exorbitant interest rates and unethical recovery practices emerge. “The fast-growing digital lending ecosystem poses novel challenges, and regulated entities need to be cautious about unethical recovery practices and data privacy,” the RBI said in its report on ‘Trend and Progress of Banking’.

“These entities also need to strengthen their oversight of outsourced activities to prevent undue harassment of their customers by third-party applications. The RBI, on its part, has endeavoured to address these issues proactively and has provided timely regulatory guidance,” the central bank said. It added that banks need to develop appropriate business strategies, strengthen governance and implement cybersecurity measures to mitigate concerns.