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Finance Minister in India urges RBI for monthly meetings to address FinTech concerns

By Puja Sharma

February 27, 2024

  • BHIM UPI
  • Digitalisation
  • Finance Minister
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RBIDuring an interaction with stakeholders from the startup and FinTech ecosystem, Union Finance Minister of India Nirmala Sitharaman urged new-age firms to continue innovating while ensuring compliance with regulatory norms. The meeting, prompted by recent Reserve Bank of India actions on Paytm Payments Bank, focused on fostering a conducive environment for growth without discussing specific cases. Sitharaman advocated for regulators to hold monthly meetings with startups and FinTech firms to address their issues effectively.

She emphasised the need for the digitisation and simplification of KYC processes across all FinTech segments. Recognising India’s position as the third-largest hub for FinTech entities globally, the finance minister welcomed suggestions to enhance ease of doing business and living standards. She encouraged regulators, including the RBI, to conduct virtual meetings monthly to address queries and concerns from the startup and FinTech community.

During the meeting, it was emphasised that innovative solutions by the FinTech companies are essential to the financial services sector while ensuring strict compliance with regulations.

It was noted that Aadhar, UPI, and API Setu, among others, have acted as enablers for Startup and FinTech organisations and simplified incorporation of companies, recognition of P2P Lenders as Non-Banking Financial Companies (NBFCs), regulatory sandbox, FinTech repository, SRO Framework for FinTech, etc have facilitated the startup ecosystem in India.

Speaking on the development Gurjot Singh, Co-founder, Collekto, said, “We applaud and support the FM’s request that the regulators/RBI conduct monthly virtual meetings to discuss startup and fintech industry’s concerns. This significantly benefits the fintech industry since it provides a platform for stakeholders to engage in open dialogue, share thoughts, and address concerns or inquiries with the authorities. This will further enable them to develop innovative solutions while ensuring regulatory compliance.

Moreover, the streamlining and digitization of Know Your Customer (KYC) regulations throughout the fintech ecosystem will give the sector the essential push, enabling them to attain enhanced business convenience while complying with regulations, eventually benefiting end consumers.”

The startup and FinTech entities appreciated the processes, regulations, and efficacy of GIFT City and the IFSCA and noted that they are creating new opportunities for the startups and FinTechs.

The number of Startups in India has grown significantly from just over 300 in 2016 to over 1.17 lakh in 2023, as recognised by DPIIT, generating more than 12.4 lakh jobs, and 47% of the Startups have at least one woman director. Additionally, India is the home to over 10,000 FinTech companies working in diverse sectors and segments. The Union Finance Minister also noted that India’s FinTech ecosystem is the 3rd largest in the world and is growing at 14% CAGR. RBI recently floated a draft framework for the recognition of self-regulatory organisations (SRO) for the FinTech sector for stakeholder consultation.

Commenting on the finance minister, request the Reserve Bank of India to conduct monthly meetings with startup and FinTech companies to attend to their concerns. Ankit Ratan, Co-founder & CEO at Signzy, said, “We applaud the initiative of Finance Minister Sitharaman to address regulatory concerns in the Fintech industry through monthly meetings with the RBI. Adopting this proactive approach will facilitate collaboration and guarantee streamlined KYC procedures, which will benefit both startups and consumers. By facilitating transparent and streamlined KYC procedures, Signzy remains dedicated to establishing trust and compliance within the FinTech landscape, ultimately empowering businesses and safeguarding customer interests.”

 

 

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