Money & Banking

Panel on fintech submits a final report to FM Nirmala Sitharaman

Our Bureau New Delhi | Updated on September 02, 2019

Recommends comprehensive legal framework for consumer protection


A steering committee on fintech-related issues has recommended that a comprehensive legal framework for consumer protection be put in place early keeping in mind the rise of fintech and digital services.

This panel, headed by the DEA Secretary, submitted its final report to the Finance and Corporate Affairs Minister Nirmala Sitharaman here at North Block on Monday.

Earlier, the committee was constituted in pursuance to the announcement made by the then Union Minister of Finance and Corporate Affairs Arun Jaitley in his Budget Speech 2018-19.

Read also: All you wanted to know about Fintech

The final report outlines the current landscape in the Fintech space globally and in India, studies the various issues relating to its development and makes recommendations focusing on how fintech can be leveraged to enhance financial inclusion of MSMEs to make fintech-related regulations more flexible and generate enhanced entrepreneurship.

The panel report also identifies application areas and use cases in governance and financial services and suggests regulatory upgrades enabling fintech innovations.

It has recommended that the RBI may consider the development of a cash-flow based financing for MSMEs, development of an open-API MSME stack based on TReDS data validated by GSTN and a standardised and trusted e-invoice infrastructure designed around TREDS-GSTN integration.

Technology and risk reduction

It has also recommended that insurance companies and lending agencies be encouraged to use drone and remote sensing technology for crop area, damage and location assessments to support risk reduction in insurance/lending business, an official release said.

Given the rapid pace at which technology is being adopted primarily by private sector financial services, the Committee recommends Department of Financial Services(DFS) to work with PSU banks to bring in more efficiency to their work and reduce fraud and security risks. Significant opportunities can be explored to increase the levels of automation using Artificial Intelligence (AI), cognitive analytics and machine learning in their back-end processes.

Positive impact

The committee has highlighted the positive impact of Fintech innovations in sectors such as Agriculture and MSMEs. It has recommended NABARD to take immediate steps to create a credit registry for farmers with special thrust for fintech use along with core banking solutions (CBS) by agri-financial institutions, included cooperative societies.

Land record digitisation

The panel recommends a special drive for modernisation and standardisation of land records by setting up a dedicated National Digital Land Records Mission based on a common National Land Records Standards with the involvement of State Land and Registration departments, to make available land ownership data on an online basis to Financial Institutions.

It has also recommended adoption of regulation technology (or RegTech) by all financial sector regulators to develop standards and facilitate adoption by financial sector service providers to adopt use-cases making compliance with regulations easier, quicker and effective. Similarly, it has also recommended that financial sector regulators develop an institutional framework for specific use-cases of supervisory technology (or SupTech), testing, deployment, monitoring and evaluation.

Also, an Inter-Ministerial Steering Committee will be set up on fintech applications in Department of Economic Affairs (DEA), Ministry of Finance, to continue to carry on the tasks of implementing this report, including exploring and suggesting the potential applications in government financial processes and applications, particularly accounting and asset management, welfare services, taxation, and handling citizen grievances. The Inter-Regulatory Technical Group (IRTG) set up under the FSDC will be the forum of inter-regulatory coordination on Fintech.

A dedicated team on Digital Economy and Fintech is being set up in the Investment Division, Department of Economic Affairs, Ministry of Finance for coordination on FinTech with relevant Ministries.

Published on September 02, 2019

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