In a bid to foster closer collaboration between federal regulators and India’s burgeoning fintech sector, Finance Minister Nirmala Sitharaman has proposed a series of initiatives aimed at addressing the concerns and issues faced by start-ups and fintech companies. The move comes following a high-level meeting convened by Sitharaman with representatives from fintech firms, regulatory bodies, and various government departments.
Addressing Regulatory Concerns
During the meeting, which took place against the backdrop of recent regulatory actions, including the Reserve Bank of India’s (RBI) measures against Paytm Payments Bank, Sitharaman underscored the importance of fostering innovation within the financial services sector while ensuring compliance with regulations. Notably, no significant apprehensions regarding the RBI’s actions were raised by the fintech founders present.
Monthly Virtual Meetings and Workshops
Sitharaman advocated for the establishment of monthly virtual meetings between regulators, including the RBI, and fintech stakeholders to facilitate open dialogue and address queries. Additionally, it was decided that the Department of Financial Services would organise workshops with law enforcement agencies to provide a platform for fintech players to voice their concerns.
Streamlining Regulatory Processes
Several key decisions emerged from the meeting, including efforts to rationalise lending costs for priority sectors and to simplify and digitise Know Your Customer (KYC) norms across all fintech segments. Moreover, regulatory bodies will explore mechanisms to ensure listed fintech companies comply with ownership and control regulations.
Acknowledging Fintech Growth
Sitharaman acknowledged the rapid expansion of the fintech sector in India, particularly over the past decade, and welcomed suggestions from industry leaders to enhance ease of doing business and improve consumer experiences. The meeting also highlighted the role of initiatives such as the Gujarat International Finance Tec-City (GIFT City) and the International Financial Services Centre Authority in creating new opportunities for the sector.
Industry Engagement and Insights
The meeting witnessed participation from key stakeholders, including Minister of State for Finance Bhagwat Karad, RBI Deputy Governor T Rabi Sankar, and representatives from industry bodies such as the Fintech Association for Consumer Empowerment, Digital Lenders’ Association of India, Payment Council of India, and Fintech Convergence Council.
A Growing Fintech Ecosystem
With approximately 10,244 fintech entities operating in the country, India stands as the world’s third-largest fintech hub. As regulatory frameworks evolve to accommodate the sector’s growth, Sitharaman’s proactive approach underscores the government’s commitment to nurturing innovation and fostering a conducive environment for fintech entrepreneurship.
