Why RBI’s Data Governance Push Puts Fintech Partners In A Spot

The RBI’s proposed data governance framework makes regulated lenders accountable for their data even when it is handled by fintech and technology partners

The compliance burden could cascade to fintechs as banks and NBFCs demand stricter data controls, audit trails and greater traceability from their partners

Fintechs working with regulated lenders may need to invest more in data architecture, consent tracking, access controls and auditable data movement

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The RBI’s proposed data governance framework could have significant implications for India’s fintech ecosystem, even though the regulatory requirements are primarily directed at banks, NBFCs and other regulated entities.

The central bank’s draft ‘Guidance on Regulatory Expectations for Data Governance’, released for public consultations earlier this week, makes it clear that regulated entities remain accountable for their data even when it is shared with or processed by fintech partners, digital lending platforms, cloud vendors and other technology service providers.

This also means that while fintechs may not directly fall under the ambit of the proposed framework, banks and NBFCs could increasingly require their technology partners to comply with stricter standards around data access, traceability, consent management and auditability.

For fintechs that form a critical part of the technology and lending infrastructure of banks and NBFCs, this could translate into greater scrutiny, more stringent contractual requirements, and higher compliance spending.

The draft proposes a common governance framework requiring........

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