Mumbai, Mar 1 (KNN) Chunking of banking is the norm; and for undertaking each of these chunks, there are some specialist entities who perform only those chunks, said RBI Deputy Governor R Gandhi adding that Payment Service Providers, SME financing and others are some of the entities who chipped away chunk after chunk of banking.

He was speaking at “FinTech Conference 2017” organized by FICCI, IBA and NASSCOM.

He said Payment service providers, P2P services, P2B services, SME financing, consumer retail financing, disintermediation, crowd funding, open ended mutual funds, money market mutual funds, deposit alternatives, trade financing, invoice financing, bill discounters, bill collectors, credit referrals, account aggregators, interest free products, syndicators, investment bankers, MFIs, co-ops, HFCs and credit rating agencies are some of the entities who chipped away chunk after chunk of banking.

Is there an element of banking that remains the exclusive privilege of banks?, he added.

The chunking away of banking from the banks has given enormous business and growth for these non-banks. With their specialisation and focussed service rendering, they are able to offer that chosen service at greatest efficiency, speed and at very affordable cost to the consumers. When these specialised entities make innovative use of ICT as their business model, they tend to be called the FinTech companies, Gandhi said.

Further, raising concerns over virtual currencies such as Bitcoin he said they pose potential financial, legal, customer protection and security-related risks.

He said such digital currencies are not created by any authority but more and more people have started accepting them.

"We can see that in these types of virtual currencies there is no central bank or monetary authority. They pose potential financial, operational, legal, customer protection and security-related risks," Gandhi said.

Gandhi said virtual currencies are stored in digital electronic form and are prone to losses arising out of hacking, loss of password, and malware attacks.

"No established framework for recourse to customer problem, disputes and grievances is feasible with this (virtual currencies) kind of framework."

The Deputy Governor said a number of cases have been reported in which virtual currencies have been used for illicit and illegal activities.