Company chiefs underscored the need for a clearly defined ‘safe harbour’, arguing that once regulatory compliance is met, companies should have the certainty to operate without the risk of retrospective action — especially as India’s digital payments ecosystem scales rapidly.
“We have to be very careful going forward. A bunch of critical responsibilities are only being assigned to those with a very high degree of accountability. As a company head, I might not go through day-to-day operations and may not know the source of a problem that can hit us one day,” a head of a payments company said, requesting anonymity.
Another payments company chief told Business Standard that firms operating in the Reserve Bank of India (RBI)-regulated space should be granted safe harbour protections unless there is clear evidence of collusion and wilful wrongdoing.
The person noted that the request comes at a time when all prescribed due diligence processes — including Know Your Customer (KYC) compliance, merchant screening, and checks against blacklists — are already being carried out across hundreds of merchants onboarded daily.
“We onboard merchants already with enhanced due diligence. We check if the website is real, has real products, and do all possible checks like if they are blacklisted on card networks, NPCI merchant database, GST, and even FIU. There has to be a safe harbour for intermediaries like us following the rules, especially when the merchant makes an error, else there is no end to it,” the person added.
Industry participants said that while the arrest of the Fino Payments Bank chief has triggered some uncertainty and apprehension, the broader ecosystem enabling digital payments growth should be safeguarded.
Last month, the Payments Council of India (PCI) had written to Finance Minister Nirmala Sitharaman, raising concerns over the Fino chief’s arrest.
Many in the industry now believe that absolute compliance with all forms of operating rules will be key to their survival going forward.
The newspaper had previously reported that the arrest of Fino Payments Bank Managing Director (MD) and Chief Executive Officer (CEO) Rishi Gupta has brought scrutiny on programme managers — intermediaries that source and refer merchants for payment processing — and raised questions about the extent of liability financial institutions face for the actions of their clients.
The bank has maintained that it followed ‘adequate due diligence and KYC norms’ at the time of onboarding programme managers or merchants, adding that it did not bypass any due diligence processes for the merchants or programme managers in question.
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