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ARTICLE · 13 APRIL 2023

FinTales Issue 28: A Partnership Of Equals?

Ikigai Law
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As we speak, the RBI is scrutinizing bank-fintech relationships. It's looking under the hood to decide if banks are over-reliant on their tech partners.

IndiaTechnology
Ikigai Law
Ikigai Law
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As we speak, the RBI is scrutinizing bank-fintech relationships. It's looking under the hood to decide if banks are over-reliant on their tech partners.

But are banks and fintechs partners? No, they are not – at least not as far as the RBI is concerned. Theirs is not a relationship of equals. It's more like a parent and child relationship. One where the parent accords the child some autonomy, but within guardrails – while remaining ultimately responsible for the child's actions. Underneath it all, the bank-fintech relationship is a hierarchical one, not one of equal partners.

For example, in the UPI ecosystem, third-party application providers (TPAPs) like PhonePe and Google Pay must be supervised by banks. TPAPs, as service providers, access the UPI platform through the bank. The bank is also responsible for ensuring the TPAP's systems are secure. Similarly, in the digital lending ecosystem, lending service providers (LSPs) like Simpl must be supervised by

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