FM Nirmala Sitharaman Bats For Regulatory Support For Fintechs, Says ‘Compliances Have To Be Simplified’

In the wake of the Reserve Bank of India’s action on Paytm Payments Bank for non-compliance with norms, Finance Minister Nirmala Sitharaman said that that the problems of a few individual startups, especially in the fintech ecosystem, should not be seen as a sectoral problem.

Speaking at an event organised by The Indian Express, Sitharaman reiterated the government’s support for the sector and said that authorities will provide “every assistance” to the startups.

She added that the Centre aims to simplify compliances and make them user-friendly.

“I am very empathetic about the sector, because one or two or four startups’ problems cannot be seen as the entire startup world’s problems. Many of them (startups) are doing alright. They may want to have greater levels of comfort from the regulators, which is fine, and we will provide that… The compliances will have to be simplified and made user-friendly,” she said.

Noting that the government was very much with fintechs, Sitharaman said that the sector will be given assistance as they intend to carry on with innovation.

Speaking about the meeting held with fintech founders on February 26, the FM said that she had a “fantastic conversation” with startups. Sitharaman also said that each of these firms voiced their concerns, which primarily revolved around seeking support from the regulator and regular clarifications they may require, rather than stemming directly from Paytm’s issues.

A month following the Reserve Bank of India’s imposition of stringent restrictions on Paytm Payments Bank Limited (PPBL) due to compliance issues and regulatory concerns, Finance Minister Sitharaman led a meeting attended by approximately 40 fintech entrepreneurs and non-fintech founders.

Inc42 reported that the meeting was attended by senior officials, including a Reserve Bank of India (RBI) deputy governor, secretaries of various departments, and ministries such as finance, DPIIT and MeitY.

From the fintech ecosystem, Pine Labs’ Amrish Rau, CRED’s Kunal Shah, Jitendra Gupta of Jupiter and Policybazaar’s Yashish Dahiya were among the attendees. Heads of banks such as the State Bank of India, Union Bank of India, Canara Bank were also present during the meeting.

Representatives from PhonePe, Google Pay, Razorpay and top officials of the NPCI also reportedly attended the meeting.

Despite the prevailing funding challenges, the fintech sector remains one of the most robust within the Indian startup ecosystem. Over the past two years, several fintech startups have secured large funding rounds.

According to data from Inc42, a total of 726 Indian fintech startups raised over $28 Bn between 2014 and 2023. Last year, four fintech companies – PhonePe, DMIFinance, Perfios, and InsuranceDekho – each secured capital exceeding $100 Mn.