“You need to have respect for the rules and regulations around. You can challenge them if you really believe that customer behaviour or experience is going in a different direction,” he said on the second day of Startup Mahakumbh.
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According to Siddarth Pai, founding partner at early-stage venture investor 3one4 Capital, if an entrepreneur is passionate and talented but disregards regulations, then failing is “not a possibility, it’s an inevitability.”
“The regulators across the world think in decadal cycles, they’re least concerned with what’s actually happening on a quarter-on-quarter basis,” he said.
“Don’t look at the regulator as someone to fight, he is not your enemy…anything that does well is always because of the industry. And anything that goes bad is always because of the regulator,” said Pai while referring to the challenges regulators face.
He also said that while some of the fintech sector’s problems have arisen because of new regulations, many of them are on account of companies not following existing norms.
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Pai said that fintechs should realise that they can’t do away with the regulator as any transaction has three parties involved. “If you optimise for a transaction only between two, the third one will eventually catch up and will end up hobbling your business.”“When you’re dealing with people’s finances, with people’s capital, that’s a very sacred obligation you take.”
These comments follow a series of regulatory measures taken by the Reserve Bank of India (RBI) impacting fintech companies.
Regulatory actions by the central bank have prompted investors, founders and product managers to think differently, especially after it ordered Paytm Payments Bank to halt all banking services, ET reported earlier.
On February 28, the RBI also introduced a comprehensive framework for a regulatory sandbox, offering a safe and protected environment for fintech startups to test their product hypothesis before taking it to the market.