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Business News›Industry›Banking/Finance›Finance›'Fintechs must treat data as fiduciary duty, not business asset,' says RBI Governor Sanjay Malhotra

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'Fintechs must treat data as fiduciary duty, not business asset,' says RBI Governor Sanjay Malhotra
Synopsis

Reserve Bank of India governor Sanjay Malhotra stressed data fiduciary responsibility for fintechs. He stated that user data must be treated as a trustee asset, not a business asset. Firms must use data strictly within user consent, protecting it diligently. He warned that eroding trust through data misuse leads to irreversible damage. Operational resilience and cybersecurity are essential for firms achieving significant scale.

ET Bureau

Mumbai: Fintechs and financial institutions must treat data as a fiduciary responsibility, not a business asset, and use it strictly within the consent provided by users, Reserve Bank of India (RBI) governor Sanjay Malhotra said.



In his address at the Global Fintech Fest, Malhotra said trust in the financial system ultimately drives adoption and endurance, leading to transformational impact.



"Every fintech in this room holds something which is much more valuable than the capital and that is the data. This data must be treated the way a trustee treats assets held for a beneficiary, collected with a clear purpose and used strictly within the consent provided, and protected as though it was one's own," Malhotra told a room full of bankers, fintech executives and regulators.

"Many fintechs may be outside the perimeter of prudential regulation, and rightly so, since proportionate regulation should not burden early-stage innovation. But as firms' payment volumes, lending book, or user base grows to a point where its disruption could meaningfully affect the financial system, that firm has a responsibility, and that responsibility goes beyond the balance sheet of the firm," he said.



He described this as the obligation to be not just too big to fail, but "too significant to be careless".



"Operational resilience, business continuity and cyber security are not burdens or costs to be minimised. They are the price of the scale a firm has achieved," Malhotra said.



He cautioned against a mindset of structuring a business around the gaps between regulatory categories of scaling first and seeking clarity or forgiveness later.



"The sandbox and pilot mechanism that we have built exists precisely so that the innovators can engage with us early, ask questions, test assumptions under supervision and shape rules that are workable for genuine innovation. A firm that engages transparency not just earns the regulatory goodwill, but also a faster and more durable path to scale," he said.



He said firms that outrun the rules typically find that the rules catch up at a much higher price to themselves and to consumer trust.



Malhotra said India's fintech ecosystem ranks third globally by funding, having attracted $2.4 billion last year, and is home to 30 unicorns.



He said many emerging economies face challenges similar to India's.

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RBI GovernorConsumer DataSanjay MalhotraIndia Fintech EcosystemFinancial InstitutionsArtificial IntelligenceRegulatory ComplianceGlobal Fintech FestReserve Bank of IndiaData Privacy

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