To further boost the growth of India’s fintech sector, Ministry of Finance has reportedly worked on a report to define fintech’s regulatory guidelines and policies. The release is reportedly put on hold because of the general elections.
“The report has been finalised. We can’t make it public at the moment, due to model code of conduct guidelines issued. But it will be released after the election is over (May 23),” a LiveMint report said citing sources.
In March 2018, an eight-member steering group was reportedly constituted to work on this report under the leadership of the finance secretary Subhash Chandra Garg. Other reported members of the committee included Ministry of Electronics and Information Technology secretary, Ajay Prakash Sawhney; financial services secretary Rajeev Kumar; and the secretary of MSME, Arun Kumar Panda.
According to the LiveMint report, in addition to facilitating ease of business for fintech companies, the report will also focus on financial inclusion of micro, small, and medium enterprises (MSMEs).
Further, it was reported that the finance ministry’s economic affairs department will spearhead the policy-related matters for the fintech sector but there won’t be a single designated regulator for the sector issues.
“Fintech business is spread across various sectors. As a result, there will not be any particular fintech sector regulator. It will depend on the sector and the issue. RBI will look into any payments-related issue, but if it is some other problem, the company can approach the concerned ministry or regulator,” the source reportedly said.
The committee is also reported to have looked into a regulatory regime for the sector along with a ‘sandbox model’ to support new innovations in the fintech sector.
Regulatory sandboxes typically involve temporary relaxation of regulations to foster a safe space for companies to test new technology-based financial services in a live environment for a limited amount of time, without having to undergo a full authorisation and licensing protocol.
Govt Efforts To Boost The Fintech Sector
India’s fintech sector has been going through a transformatory phase with the growing internet penetration and the wide adoption of Aadhaar, UPI(unified payments interface) and eKYC (know your customer).
This digitisation wave has been further boosted by government initiatives such as Jan Dhan Yojana which offered zero-balance bank accounts.
Earlier this month, the Reserve Bank of India (RBI) has also released a draft ‘Enabling Framework for Regulatory Sandbox’ which will enable fintech startups to test within a regulatory sandbox (RS). Initially, RBI will shortlist 10-12 fintech startups for its 26 week long regulatory sandbox.