SEBI laid down core principles to guide financial regulators in India
By Puja Sharma
FinTech companies have fewer compliance requirements and commitments than their traditional counterparts, such as capitalization, identification verification, and consumer grievance redress.
Madhabi Puri Buch, Chairperson, Securities, and Exchange Board of India (SEBI) laid down some core principles that guide regulators while delivering her keynote address at the Global FinTech Fest 2022 (GFF 2022) in Mumbai. “There are some key principles that guide a regulator. These include anonymity, transparency, financial inclusion, and structural vulnerability,” she said.
Setup in 2017 as a FinTech committee, FinTech Convergence Council was later converted into an independent council with its independent governing board, with over 70 members. The FCC works towards the penetration of financial services with the aim of financial inclusion and moving towards a digitally empowered country.
“There is likely to be a regulatory gap when there is something new and innovative that happens in the market. It is up to the regulator to keep pace with that. We intend to narrow that regulatory gap in the startup ecosystem,” Buch added.
Elaborating on inadequate disclosure to a regulator, the SEBI chairperson said, “If your business model is woven around a black box, which is not open to sunlight for disinfecting or not capable of being audited or validated, it cannot be permitted.
FinTech companies have fewer compliance requirements and commitments than their traditional counterparts, such as capitalisation, identification verification, and consumer grievance redress.
To promote digitisation and minimise client acquisition expenses, the Reserve Bank of India (RBI) permitted fintech companies to use eAadhaar authentication and video-know-your-customer (KYC). FinTech firms can quickly roll out new features and products by putting them through their paces in safe sandboxes while ensuring compliance with government rules and data protection. FinTech companies can now offer innovative products and services in a more timely and secure manner.
Additionally in India, the adoption of new methods of payments like contactless cards, tap-and-go, QR codes, etc., helped in mitigating risks, making digital payments simple and secure. These latest technologies facilitate advanced intelligence to assess behaviour patterns and create a layered defence against unauthorized access to information and avert online fraud. With improved technology and awareness, digital payments provide people with a safe, secure, and seamless experience. The introduction of Card-on-File Tokenization has will add a safety layer to the digitised payment ecosystem by replacing the card number with a unique alternate number called “token.”
In his address to the Global, Fintech Fest Shaktikanta Das, Governor, Reserve Bank of India, said: “Technology, innovation, and FinTech are working in tandem and contributing to the dynamism of the sector. In our journey towards a higher level of sustainable development and financial inclusion these forces morphed into force multipliers,” Shri Das said.
“We see a lot of opportunities not only for enhancing the scope and depth of all that is happening in the fintech sector but the way it can deepen financial inclusion, enhance and broad base its footprint in the journey of our country towards 2047. I think there is a lot of potential and if the regulator and the fintech players work together, we can create several milestones in our journey towards India in 2047,” hge explained.
“The next decade of finance will be more focused on two central themes – sustainable development and technology-led innovations transforming the lives of the common people,” Shri Das added.
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