The Indian Government has formed a Steering
Committee to consider various issues relating to development of Fintech space
in India, with a view to making Fintech related regulations more flexible &
generate enhanced entrepreneurship.
The constitution of the Steering Committee on Fintech
related issues will be: Secretary, Department of Economic Affairs (DEA, under Ministry of Finance); Secretary, Ministry of Electronics and
Information Technology (MeitY), Secretary, Department
of Financial Services (DFS);
Secretary, Ministry of Micro, Small and Medium Enterprises (MSME); Chairperson, Central Board of Excise and
Customs (CBEC); CEO, Unique
Identification Authority of India (UIDAI); Deputy
Governor, Reserve Bank of India (RBI),
along with Joint Secretary (Investment), DEA as the Convener. The DEA Secretary
will serve as the chairman.
The Steering Committee may also invite participants from the
private sector.
The Terms of Reference of the Steering Committee include taking
stock of the developments in the Fintech sector globally, and in India, and
arrive at a common shared understanding of the current state of play. The Committee
is expected to critically analyse the regulatory regime spread over different
entities that has impacted the growth of Fintech in India.
The Committee will also consider how Fintech can be
leveraged in critical sectors of the economy, such financing of MSMEs,
affordable housing, delivery of e-services to vulnerable sections, provision of
land record management and other government services, access and adoption of
digital payments, and it will study the developments in these areas.
The Committee will develop suitable regulatory
interventions, to drive growth in the Fintech sector. For example, it will explore
the regulatory sandbox model to enhance the role of Fintech in the sectors
identified for focused interventions.
During the past few years, Fintech regulatory sandboxes have
been set up in several jurisdictions around the world, such as Singapore,
Hong
Kong, Australia
and the UK.
They encourage Fintech innovation, by allowing financial institutions and Fintech
start-ups to experiment in a safe space and without the need for an expensive
wider roll out, with the attendant risks for the companies as well as customers.
Sandboxes also provide financial regulators an opportunity to learn about the
risks associated with new technologies and adjust their regulation accordingly.
A recent report
from a Working Group on Fintech and
Digital Banking set up by the RBI recommended that an appropriate framework be
introduced for “Regulatory Sandbox/innovation hub” within a well-defined space
and duration and said that IDRBT (Institute
for Development and Research in Banking Technology) is well placed to create
and maintain a regulatory sandbox in collaboration with RBI.
The Committee will consider means of using data from the
Goods and Services Tax Network (GSTN)
[1] and data residing with
information utilities such as Credit Information Companies (CICs) etc. in open
domain, to develop applications for financing of MSMEs.
The Terms of Reference also includes working with Government
agencies like UIDAI to explore creation and use of an unique enterprise
identification number. UIDAI, a statutory body, under MeitY is responsible for
issuing India’s national ID, Aadhaar.
Finally the Committee will look into international
cooperation opportunities in Fintech with countries like Singapore, UK, China,
etc.
[1] GSTN is a non-profit, non-government
organisation (24.5% shares held by central government, 24.5% by state
governments and remainder by non-government financial institutions), responsible
for managing the IT system for the Goods and Services Tax (GST) regime which came
into effect last year. The portal will be used by the government to track financial
transactions, and it will provide taxpayers with all relevant services, from
registration to filing taxes and maintaining and updating tax details.
The report of the RBI’s
Working Group on Fintech and Digital
Banking published on 2 February 2018, can be accessed here.
Last year, the
Indian securities markets regulator, SEBI or the Securities and
Exchange Board of India has constituted
a ‘Committee on Financial and Regulatory Technologies (CFRT)’ to study Fintech
and RegTech issues in the context of securities markets.
