The threat to the country’s national security through the misuse of financial data has reached the Parliament with former RBI chief economist — and now a Rajya Sabha (RS) MP — Narendra Jadhav raising the issue on Wednesday morning.

Jadhav has also sent a letter to the Parliament’s Standing Committee on finance, one of the most powerful parliamentary bodies, asking it to look into the issue of data security.

This comes at a time when Paytm, in which Chinese ecommerce giant Alibaba has a controlling stake, has applied for a non-banking finance company (NBFC) licence from the central bank. There is a high possibility that the issue will soon be discussed in the Rajya Sabha, Jadhav told TOI .

On June 15, TOI had first highlighted the financial data security concerns of domestic finance companies — relating to NBFCs which are fullyor majority-owned by foreign entities. Through a calling attention motion, Jadhav said that there was a grave danger to India’s national security on account of the influx of Chinese multinationals into the country’s financial technology space, and Alibaba buying a large stake in Paytm was a suitable case to highlight.

“The modus operandi of this financial aggression appears to be as follows: The Chinese authorities seek a direct role in influencing corporate decisions of firms like Alibaba. Alibaba has applied for a NBFC licence in India through Paytm where it has a majority stake. Through the NBFC route, Chinese multinationals could possibly capture a large chunk of our domestic lending market by resorting to predatory pricing and capital dumping,” Jadhav said.

“If Chinese multinationals are allowed to dominate the Indian financial services sector, they will gain access to private/financial data on 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,” he said .

The RS MP asked the government and the RBI to take immediate action before it was too late. He said that the current foreign direct investment (FDI) rules, which allow 100% foreign investment in NBFCs under the automatic route, should be revisited as “this policy of unfettered foreign ownership and control of our NBFCs” has the potential to destroy the strong fabric of our financial services sector .

Source : Times of India