Finance Minister Nirmala Sitharaman on Monday, February 26, chaired a meeting with top executives of around 50 fintech firms to discuss regulatory issues being faced by them and impressed upon them to strictly comply with the norms, according to an official.
With over 10,000 fintech entities, making India the world's third-largest hub in the sector, Sitharaman emphasised the need for consistent dialogue to address the concerns and challenges faced by startups and fintech firms.
Recognising the pivotal role of innovation in driving financial services, the minister urged regulators, including the Reserve Bank of India (RBI), to convene monthly virtual meetings to promptly address queries and issues raised by stakeholders.
During the session, it was underscored that while fostering innovation, compliance with regulations remains paramount. Initiatives such as Aadhar, UPI, and regulatory frameworks like the sandbox environment have been instrumental in nurturing the startup ecosystem.
Participants lauded the efficacy of initiatives like the Gift City and the International Financial Services Centre Authority (IFSCA) for creating new avenues in the fintech landscape.
India's startup landscape has witnessed exponential growth, with over 1.17 lakh startups recognised by the Department for Promotion of Industry and Internal Trade (DPIIT) in 2023, generating millions of jobs, a significant portion being led by women.
The fintech sector, growing at a 14% CAGR, has drawn attention globally, with recent initiatives like the RBI's draft framework for Self-Regulatory Organisations (SROs) further enhancing regulatory clarity.
Key takeaways from the meeting included plans for a workshop with Law Enforcement Agencies (LEAs) to address fintech-related issues, streamlining patent examination processes, rationalising lending costs for priority sectors, and enhancing digital KYC procedures across fintech segments. Additionally, discussions centered on adapting regulatory frameworks to accommodate changes in ownership structures and addressing cybersecurity concerns through forthcoming legislation like the Digital India Act.
Kunal Shah, the founder of Cred, expressed his appreciation, stating, "Remarkable bias for action and initiative shown by policymakers with diverse responsibilities who came together for positive engagement with fintech startups. Grateful to the Finance Ministry and RBI for the frank exchange, encouragement, and belief in the role fintechs play in enabling India's economic and social ambitions."
Remarkable bias for action and initiative shown by policymakers with diverse responsibilities who came together for positive engagement with fintech startups. Grateful to the Finance Ministry and RBI for the frank exchange, encouragement, and belief in the role fintechs play in…
— Kunal Shah (@kunalb11) February 26, 2024
The meeting was attended by top executives of private sector fintech firms, including RazorPay, PhonePe, Google Pay and Amazon Pay. NPCI officials too were present.
From the government side, the meeting was attended by Financial Services Secretary Vivek Joshi and MeitY (Ministry of Electronics and Information Technology) Secretary S Krishnan. RBI Deputy Governor T Rabi Sankar was also present. The meeting comes at a time when the Reserve Bank of India's action against Paytm Payments Bank has put the spotlight on regulatory compliance in the fintech industry.
Representatives of Paytm was not invited for the meeting on Monday. On January 31, RBI barred Paytm Payments Bank Ltd (PPBL) from accepting any fresh deposits or top ups from customers after February 29 for not complying with regulations. The deadline was later extended till March 15.
Last week, RBI advised the National Payments Corporation of India (NPCI) to examine the possibility of migrating the users from PPBL to four to five other banks. PPBL has 30 crore wallets and 3 crore bank customers.
First Published: Feb 26, 2024 7:39 PM IST
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