18th Mint BFSI Summit LIVE Updates: ‘Form of money has evolved,’ says RBI Dy Governor T Rabi Sankar

Speaking on India's growth numbers, Debadatta Chand, MD and CEO, Bank of Baroda said , “capital market is a some kind of a lead indicator with regard to the growth that we have in the system."

Some of the competing markets became more attractive for FIIs to move to Korea, Taiwan, China, etc, according to K Balasubramanian, CEO, Citi India.

The composition of economy is changing, services sector is growing significantly, according to Rajiv Anand, MD and CEO, IndusInd Bank.

“If you look at the scenario, we have said, while announcing also the q1 and q2 outcome, we said the bank's corporate lending, which slightly is a muted growth in both the quarters, is going to pick up in q3 and q4,” said Debadatta Chand, MD and CEO, Bank of Baroda.

He added, “if you see all these numbers, I think there is a demand is there in the economy.”

Nirav Shah, managing director, of Equirus Capital (investment banking) addressed the question on how can both NBFCs and fintech speed up their credit decisions without compromising the on the compliance and the risk standards.

He said, “You have to comply with Digital Personal Data Protection (DPDP) rules. I think that's that's becoming the norm today, so make sure that the data is not compromised. Okay? What one has to make, also very, very important, strong at the outset, is to make sure there is, there is a common set of fraud detection.”

“We actually believe that the financial world is a borderless world. People inhabit a digital world. That's a borderless world. So the financial world should also be a borderless world by putting in the right controls digitally, but making the standards come,” said Paroma Chatterjee, CEO of Revolut India.

Speaking on fintech platforms hitting public markets, Madhusudhan Ekambaram, CEO and co-founder, Kreditbeesaid, “ Any company which is investor backed, ultimately has to get into an IPO because that is seen as a good exit point or a liquidity kind of improve. So I don't think there is, there's any doubt.”

He added, “even financial services, the specially lending companies. I think, by nature of the company, the requirement of equity is, continuous. I don't think there's it ever stops, right? So if it is growing, then we have to continuously raise equity. Maybe the frequency changes, right? So in that way, it's also even, even from the regulatory perspective, I think after certain scale and size, it is kind of expected, although there is no clear mandate around that, but it's an expectation that you list, because a lot of transparency and governance kind of becomes a super solid.”

Earlier chapters of fintechs were to build width, by getting more and more customers on board. Today, it's more about depth, and therefore, how well you can give that customer the entire financial services soon," said Sandeep Singh, CEO, Trillionloans (Bharatpe).

‘Not reached a point when AI can replace humans,’ said Hitesh Sethia, MD and CEO of Jio Financial Services.

Hitesh Sethia, MD and CEO of Jio Financial Services, addresses the topic of 'The $5-trillion India’.

“Unbacked cryptos are pure gambles, in the sense of mathematical bets. So an event has to happen, you just bet on that event,” said RBI Dy Governor T Rabi Sankar.

Opening up on the use of Central Bank Digital Currency (CBDC), RBI Dy Governor T Rabi Sankar said, “For CBDCs to have the same demand that paper currency has, then anonymity is unavoidable. It has to be provided at the same time. These are digital transactions. Paper can be just handed over. There won't be a record, but digital transactions always leave a footprint, so it is difficult to anonymise transactions. It's possible. There are technologies which make that possible. But more importantly, we would require a legal backing.”

“Risks of stablecoins beyond the facilitation of illicit payments and circumvention of capital measures are stablecoins raise significant concerns for monetary stability, fiscal policy and intermediation and systemic resilience,” said T Rabi Sankar.

Comparing stablecoins with UPI, RBI Dy Governor T Rabi Sankar said, “An often cited benefit is that stable coins can make payments, particularly cross border, payments, faster, cheaper and more efficient in the domestic space, real time, fast payment systems such as UPI already enable fast, low cost and reliable payments, and there is no reason to believe that stable coins would be superior from that from the point of view of either cost or speed or reliability in the cross border space, as far as the domestic space is concerned.”

“Point to keep in mind is that stablecoin is private money. It is issued by a private person, therefore, stablecoins fail to satisfy the two defining features of modern money,” said RBI Dy Governor T Rabi Sankar.

“Cryptocurrency is not a financial asset as well, or for that matter, any asset at all. It is just a piece of code,” said RBI Dy Governor T Rabi Sankar.

“Cryptocurrencies have no intrinsic value. They are not backed by any promise to pay. That is, they have no issuer. Since they do not meet the basic attributes of money, I reach the conclusion that they are not money. In fact, since they do not have any underlying cash flows, they are not financial assets as well. Please think of any financial asset that comes to your mind; it has to satisfy at least two things that it is someone's liability, or there are underlying cash flows,” said RBI Dy Governor T Rabi Sankar

“Over time, the form of money has evolved with technology, from commodities to metal to paper to balances in deposit accounts to now digital tokens,” said RBI Dy Governor T Rabi Sankar.

“The fundamental challenge of cryptocurrencies is that they claim to change the very nature of money, because cryptocurrencies do not represent value, either in terms of intrinsic worth, or in terms of any promise to pay,” said RBI Dy Governor T Rabi Sankar.

RBI Deputy Governor T Rabi Sankar's address will focus on the topic of stablecoins.

RBI Dy Governor T Rabi Sankar's address begins.

At 3 pm, Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar will give a keynote speech and engage in a fireside chat. As the RBI formulates policies on inflation, liquidity, digital payments, and financial stability, Sankar’s insights will be crucial for understanding the factors shaping India’s macroeconomic and financial landscape.

In the post-lunch session, at 3 pm Reserve Bank of India (RBI) Deputy Governor T Rabi Sankar is scheduled to deliver a keynote address and engage in a fireside discussion.

As the RBI shapes policy on inflation, liquidity, digital payments, and financial stability, Sankar’s perspective will be essential in understanding the forces influencing India’s macroeconomic and financial outlook.

In investing, impulsive behaviour is not to your advantage. So many times with these platforms based on algo. We have to cautious that human touch will be critical. Fashionable to talk about tech, but advisory (humans) will have to be built. Strongly discourage people to get impulsive when investing, its good for Zomato and Blinkit, but not for mutual funds

Tech will play a great role. Today, 30-40% of fresh SIPs are coming from those tech platforms (digital platforms). But new IPOs has to be many-fold, it cannot be the same set of companies, it will create a demand-supply mismatch, so we have enough pool for investors.

Today, parents (rich or poor), tell their kids to start SIPs. So, there is financial literacy.

Two things matter — push and pull. Push for literacy, where people realise you need to have appropriate investment to beat inflation and generate return. Pull is to communicate with investors and make them realise that this in their benefit.

Aim is to reach every Indian household, can we do it in one year? May not be possible. We may be there a decade down the line. But, the drivers of mutual funds will be Tier 2, Tier 3 cities, and very fast you will see this. The growth in the next decade or two will be from these cities.

Noise around IPO, is just one stock — we don't track on daily basis. Our job is to create value for investors. If we have taken a wrong decision, it must be corrected. If investments are risky, there are millions of retail investors at risk.

When looking at valuations where the MF is investing, we have to stay away from the noise and check if we can create value for our unit holders. The analyst, the research team does the hard work. We are proud, the whole industry, in most of the cases, MFs have protected interest of small investors.

No other industry has provided investors with as much growth as mutual funds have.

Nilesh Shah, Managing Director of Kotak Mahindra Asset Management Company believes that while the MF industry has expanded, there is far to go. “We have penetration in all pincodes, we have 5 crore retail investors, we should have 50 crore. There is a long way to go.”

On whether further expansion in the industry, will reduce prices for MFs, Shah said it would be possible in some situations, not all.

Says he missed out on HDFC Bank. “Keep an open mind, just because you want something below 10p or 15p, you should not shut it out. HDFC Bank has made lots of returns for investors. But my biggest regret is somehow I missed it.”

He taught me difference between income and wealth. Taught us how to fish and never ask for a fish — we have hardly 10-20% in common in our portfolio. He told me he loved that I had my own thinking… Have to be a better Madhu Kela, not try to be Warren Buffett.

Kela said that he does not follow posts on social media, but gets curated information from his team. “Personally love podcasts. They are recommended by my team and I enjoy it.”

Promoter wants to sell, but investor has to keep their eyes and ears open on what theya re buying. Mutual funds are doing a tremendous job that some of these valuations are kept in check and that is benefitting smaller investors. E.g. Groww IPO, some amount was reserved for MFs. So from primary market perspective, MFs keeping tabs on valuations is very good for retail small investors.

Markets have absorbed ₹5 lakh crore issuance this is a new era for India.

Identify and focus on sectors that are gaining. But you need to do enough research to know when to sell — if you have a winner (e.g. Warren Buffett's 30% in Apple), you must back them and hold them.

We have added ₹4 trillion worth of market cap in 5-6 years… over a period of time market gives average returns. But over a longer period of time, I would say equities would continue to be among the better asset classes in India. I see no reason for the 14-15% compounding returns to not continue.

Since 1991, there are period within which themes have done well. From 2002-03, the whole market was in favour of economy related stocks (power, PSUs, public sector banks), so that is what an investors is looking for. Stay focused on the India story, convinced on the markets i.e. Rakesh Jhunjhunwala, that how you make money.

The situation between insurance providers and hospitals has to be solved. Forget insurance, if you have money, you may not need insurance. But we need to resolve the cost. If the cost of healthcare increases at this rate, there is no standardisation of price… it is not a workable model.

Healthcare is seen as an emergency. Insurance company is not generating or adjudicating claims. The onus on insurance company is to protect all policyholders, we hold policyholders' fund. Which is optimal premium and reasonable claim settlement in reasonable time. When it comes to claims, the hospital is responsible.
Next debate is how can we be proactive. How do we handle a health crisis if your architecture is varied?

Health insurance still outdated. Across products, its a tool to protect your family, the decision-makers are now younger and new-age. So, form factor has to be observed by industry to reach out to these consumers.

The perception is anxiety: will the insurance company pay me when its time? Industry has to address that.

Insurance sector needs products that address concerns i.e. OPD insurance. 18% can be used by people to upscale their coverage. Products also have to be something they understand. It can be good for customers and industry.

Health insurance must move to wellness insurance.

We have multiple tasks to do. We are a robust institution, ably supported by committee processes (not centralised). We have healthy practice of public consultations, and we give importance to every single comment. Doable, nuanced, whether it's for later stage, or if we cannot agree rationale is given.

Every quarter we are able to bring a different level of thinking and in some areas we have brought tighter regulations.

The report is made public. The implementations will be taken up at the next board (meeting).

Has to be constant measures. Social media is such an area that has continuous surveillance and removal. There is a line between education — freedom of expression and people's fundamental rights have to be respected. Increasingly we have tools to distinguish where the lines are being crossed.

Regulation is very clear. I don't think there is ambiguity — what constitutes investment advice is clear. In several pump-and-dump cases we found finfluencers were involved. So, one part is surveillance on stocks and on social media to see what's going on…

In disclosures, we brought in verification and instructions that flagged claims are verified by the exchanges.

Taken a review not long ago when issues where brought to SEBI and we continue to monitor… we have to identify whether the systemic problem continues and how to proceed. It has to be data-based rather than feeling, because measures have been taken.

We do not have specific suggestions (people write on social media) but we have to base it on data.