NPCI .. a monopoly whose half life just got over.
Today, like most other days, I got to spend three hours with yet another eminent IITian. I dont know why it is three hours – but over 4000+ meetings, that is what it averages at.
We met after 35 years. Most of these years, he had spent setting up and running a large bank in India. Finally the RBI retired him, and like so many others in my spreadsheet – he funds philanthropic projects, oversees a massive alternate investments portfolio (close to USD 10 Billion) and vents his frustration by teaching in a college (my alma mater in this case). Immediately after retiring, he joined a course in AI and like so many others – is now trying to get his hands around this new complex subject – that was never a part of our curriculum in college.
After i had finished discussing his philanthropic projects – the usual couple of 100 crore+ centres of excellence in a IIT from corporate CSR, another in a IIM on something “not allowed in CSR” on personal account and for completeness – something to do with the masses (paediatric oncology in this case) etc.
I got down to banking. What did he think of digital banking and the digital rupee ? Like all bankers of his generation – digital banking a new division in a legacy bank. And digital rupee is a niche product which is more hype than reality. Regulators dont like anonymity or privacy – he declared conclusively. So anything anonymous is a no go. Governments dont like to give up power. Just like meritocracy in the judicial system is dead since the advent of the collegium in the nineties – privacy is dead since the invention of the aadhar number. Banks are intermediaries and the digital rupee disintermediates – so bankers dont like it. To get around this reluctance, RBI is flogging NPCI to build products that go directly to the consumer. Good thought ………. with zero merit. The banks hold your money. They intimidate their customers and bully them into subservience. For now, there is no option.
On another note, lets move to NPCI. It was a great endeavor. It is a section 8 company with a lot of revenue. They have done really well. They started on a solid foundation and are rapidly building on that foundation. Unless someone were to handcuff them – there is no way, they will let go of their dominance and control. Now they have everyone at their feet. Consumers, banks and even RBI.
RBI is a central bank. Its job is to control paper currency, set the repo rate and regulate the banks. But NPCI does none of these. So how can RBI regulate them ? So NPCI like all great monopolies is set for failure. It is a monopoly and one successful cyberattack and they are bone for the dogs. In the process they will bring the banking system down. Not temporarily, but conclusively. NPCI’s lifeline is the internet. If the internet is down, NPCI will go down.
NPCI desperately needs a competitor. One that is offline.
The govt wont build one. They dont know how to.