“Similar activities creating similar risks should, wherever appropriate, face similar regulatory treatment,” Murmu said at the Global FinTech Fest in Mumbai. On the sidelines, he said the central bank is reviewing the feedback received from non-banking finance companies on the proposal that NBFCs should offer only term loans with a pre-determined repayment schedule, under which sanctioned limits cannot be restored once repaid. The proposal would effectively bar flexi-credit products that allow borrowers to repeatedly draw down and repay the same credit line.
Murmu acknowledged that regulation may affect some fintech companies’ short-term revenue models, but said compliance was critical to sustainable growth and could help attract capital.
He said regulation and innovation should not be viewed as opposing forces. “Regulation creates the confidence for innovation to scale, and responsible innovation gives regulators the confidence to allow space for experimentation,” Murmu said.
For fintech companies, regulation is often viewed as a compliance cost, he said. But strong governance, cybersecurity, responsible data practices and customer protection can become competitive advantages as Indian fintechs expand overseas.
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“Partnership models are valuable, but the regulated entity remains accountable for services delivered in its name,” Murmu said. “Technology can distribute a service, but it cannot distribute responsibility.”
That accountability will become more important as algorithms increasingly influence credit decisions. Models can embed historical bias, produce economically inappropriate outcomes or make decisions that are difficult to explain to customers, he said.
“When an algorithm makes or materially influences a financial decision, who is accountable? The answer cannot be the algorithm,” Murmu said. As finance becomes more automated, human accountability must become stronger, not weaker, he said.
Murmu also flagged new regulatory questions as artificial intelligence moves from systems that analyse and recommend to agents that can plan and execute actions with limited human intervention.
“Who is responsible when an agent acts incorrectly? How do we ensure it acts in the customer’s interest rather than the institution’s?” he asked.
Institutions also need to be able to supervise systems operating at machine speed, he said. “These are not arguments against agentic AI. They are arguments for responsible agentic AI,” Murmu said.
The scale of India’s digital payments ecosystem is also creating a different set of risks.
“Scale changes the nature of risk,” Murmu said, calling for payment systems to be designed for stress, with redundancy, business continuity, incident response and recovery embedded into their architecture and governance.
Fraud must increasingly be treated as an ecosystem problem involving banks, payment operators, fintechs, telecom providers and law enforcement, he said.
“The measure of success for a payment system, then, is not only the number of transactions it processes each second. It is the trust embedded in each of those transactions,” Murmu said.
Murmu said the next phase of digital finance must focus on customers who remain outside the system, including those facing connectivity, digital-literacy, language or accessibility barriers.
“I would ask the industry to treat inclusion as a design requirement, not a later addition,” he said. “One built for the hardest case almost always serves everyone else.”
He also urged Indian payment providers and network operators to begin preparing for quantum computing, which could eventually threaten the cryptographic foundations of today’s financial system.
“The time has therefore come for Indian payment system providers and network operators to begin moving towards quantum-proofing our payment systems,” Murmu said.
“Quantum resilience is an ecosystem capability, not an institutional one,” he added.
