Chinese investment in India’s financial technology space a threat: Rajya Sabha MP Narendra Jadhav

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.