Stating that Chinese firm Alibaba has a majority stake in Paytm, which has applied for NBFC licence, Rajya Sabha MP Narendra Jadhav said the influx of Chinese multinationals in the Indian fintech space poses “grave danger to Indian national security”. Pointing that the current FDI regulations allow 100 per cent foreign investment in non-banking finance company, he called for the government and the RBI to “critically review” FDI regulations for investment in NBFCs.
“There is a grave danger to India’s national security on account of the influx of Chinese multinationals into India’s financial technology space,” said Jadhav, the nominated member in the Rajya Sabha during his Zero Hour submission. Calling for review of FDI regulations Jadhav said that the policy of unfettered ownership and control of NBFCs can possibly destroy the strong fabric of our financial services sector and must, therefore “be critically reviewed without any further loss of time.”
Stating that Alibaba has applied for NBFC license in India through Paytm where it has a majority stake, he said that “Through the NBFC route, the ChineseMNC could possibly capture a large chunk of our domestic lending market by resorting to predatory pricing and capital dumping.”
The parliamentarian further added, “If Chinese MNCs are allowed to dominate the Indian financial services sector they will gain access to private and financial data of millions of individuals and corporates. This could inevitably expose India to a serious geo-political risk and make our country vulnerable to external influence thereby compromising national security… The government of India and RBI must consider taking immediate action before its too late.”
As per the RoC documents filed by One97 Communications – the parent company of Paytm Payments Bank – Alibaba .com Singapore and AlipaySingapore own an aggregate of 39.86 per cent stake in One97 Communications.
Even the industry insiders seem concerned about the fact that there is no restriction on foreign ownership in NBFCs which have seen a significant growth in their business over the last few years. “NBFCs account for around 25 per cent of the flow of credit and the housing finance companies control almost 55 per cent of the housing finance market. I think that the ownership regulation in NBFCs have to be brought in line with that for the banks. With foreign entities owning significant holding in NBFC’s, they can control them and it may lead to capital dumping,” said Gagan Banga, vice-chairman, MD & CEO of Indiabulls Housing Finance.
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