A panel on Fintech set up by the Ministry of Finance has submitted its final report with many recommendations recently.
- The Fintech panel headed by DEA Secretary was constituted by the Ministry of Finance after the announcement for the same was made in the budget speech of 2018-19 by the then Minister Arun Jaitley.
- In its final report, the committee has outlined the fintech landscape in the world and in India, studies various issues related to the development of the sector and made recommendations on how fintech can be leveraged toe and generating enhanced entrepreneurship.
- The panel has recommended a comprehensive legal framework for consumer protection keeping in mind the rise of fintech and other digital services.
- It identified areas in governance and financial services where fintech services can be used and suggested to upgrade the regulatory provisions to enable fintech innovation.
- It recommended that RBI may consider the development of cash-flow based financing for MSMEs.
- Development of an open-API MSME stack based on TReDS validated by GSTN is suggested.
- Also, the panel recommended allowing insurance companies and lending agencies to use drones and remote sensing technology for damage and location assessments to support risk reduction in insurance/lending business, crop area assessment etc.
- With the rapid pace at which the fintech sector is expanding, the committee recommended that to reduce fraud and security risks, the Department of Financial Services (DFS) should work with PSU banks to bring in more efficiency to their work.
- It also noted that ample opportunities are available with Artificial Intelligence, machine learning, and cognitive analysis in the back-end processes of fintech players.
- The panel recommended for modernisation and standardisation of land records across the states through National Land Records Mission based on a common National Land Records Standard. Also, all such data on land ownership is made available online for financial institutions to verify.
- It recommended for the adoption of Regulation Technology (RegTech) by all financial sector regulators to develop standards. This will facilitate the financial sector service providers with easy, quick and effective regulatory compliance.
- It also wants the financial sector regulators to develop an institutional framework for the specific use-case of supervisory technology testing, deployment, monitoring and evaluation.
Fintech sector has seen a major upswing in investments. Many start-ups have embraced the sector and are changing the financial landscape of the country. But, the pace at which the sector is expanding needs proper regulatory mechanisms to check frauds and risks.
The committee has done its part in recommending what is good for both the sector and the consumers. It is up to the government to adopt these recommendations.
The government is looking to set-up an Inter-Ministerial Steering Committee will be set up on fintech applications in Department of Economic Affairs (DEA), Ministry of Finance which will take at implementing the recommendations of the report.