The Reserve Bank of India (RBI) is keeping a track of the recently announced tie-up between Google Pay and Equitas Small Finance Bank. The apex bank is weighing the implications and subsequent consequences of large tech companies like Google setting a foot in the financial technologies sector in India reported the Business Standard.
Last week, both the companies announced the tie-up. This partnership will allow Google Pay users to open up fixed deposits with the Equitas SFB through the app itself.
“Equitas SFB has launched a new initiative, enabling Google Pay users to book fixed deposits (FDs) on Google Pay in under 2 minutes without having to open a bank account,” said the lender in its regulatory filing.
“In an industry-first, consumers can through the Google Pay app book high-interest rate FDs fully digitally – without needing to open a savings account with Equitas Bank on its own Spot integrated with the Google Pay platform. So, Google Pay users can book FDs from the comfort of their homes ensuring an easy, safe and hassle-free experience. On maturity, principal and interest of the FD go directly to the Google Pay user’s existing bank account – which could be in any bank in India,” the bank said.
Apparently, the deal is done within established rules and regulations, the sudden entry of Google, via partnering fintech companies, into the deposits market, has irked the RBI, sources told the Business Standard. RBI is worried about the freedom given to large tech companies like Google, Facebook, Amazon, Apple and Microsoft in the financial sector.
In its bi-annual Financial Stability Report, the RBI pointed out India’s financial stability has a threat from such tech firms entering the financial services sector.
Equitas, its technology provider Setu, and Google have mentioned categorically that Google Pay will act just as a distribution channel.
Following the rules neither Google gets no commission from new FDs, nor it has any say in the running of the FDs, and the KYC is handled by the banks. Basically, Google Pay works just as a platform for Equitas to offer its services and onboard potential users.
“As Google Pay, our role is firmly circumscribed to providing these merchants a surface where Google Pay users can discover and gain from these offerings — be its credit products, insurance or any other,” wrote Sajith Sivanandan, business head, payments and new business unit of Google APAC in a blog post.
While the RBI keeps an eye on the developments, further details and insights from the bank regulatory authority may be facilitated in their upcoming reports.