The Reserve Bank of India (RBI) has cautioned about the growing presence of big technology companies in India's digital financial services and payment systems.
The central bank added that this could pose a financial stability risk. RBI, in its semi-annual financial stability report, flagged concerns over what it called 'Big Techs', stating that they can potentially become dominant players in financial services and can turn out to be "too-big-to-fail".
"Specifically, concerns have intensified around a level playing field with banks, operational risk, too-big-to-fail issues, challenges for antitrust rules, cybersecurity and data privacy," the RBI said in the report released on July 1.
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Although the report doesn't identify countries or companies, India has witnessed immense interest from loaded global tech companies in recent years.
Alphabet Inc. and Amazon.com Inc. are among the major players who are pouring billions of dollars into developing payment ecosystems, linking the retail networks of many mom and pop stores, selling insurance and mutual funds on their apps, and eroding banks' digital market share.
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The digital payments segment has grown to record highs with Google Pay and Phonepe reaping the biggest slice of the cake called the retail market as the COVID-19 pandemic impelled people to shop online.
The RBI's concern comes at a time when the biggest US internet companies are engaged in a tussle with the Indian government over the new IT rules, stating that they curtail free speech and privacy.