The Reserve Bank of India (RBI) on Wednesday said that it has recognised the Fintech Association for Consumer Empowerment (FACE) as a self-regulatory organisation (SRO) in the fintech sector. This recognition comes from among the three applications received to establish an SRO. Of the remaining two applications, one has been returned by the RBI with a provision for resubmission after meeting specific requirements, while the third application is still under examination.
“Through regular consultations, feedback mechanisms and policy dialogues, the SROs would facilitate open communication and enable fintechs to stay informed about regulatory expectations and priorities,” said Shaktikanta Das, Governor, RBI, at the Global Fintech Fest (GFF).
The RBI had called for applications for SROs in the fintech sector and had issued a framework for SROs last year.
Das highlighted that the sustainable and orderly development of the fintech sector requires an appropriate balance between innovation and prudence. “Our endeavour is to carefully craft regulations to achieve this delicate balance, while simultaneously ensuring trust, security, accessibility, risk management, and competition,” he said.
According to Das, a preferred approach for achieving balance between innovation and prudent regulation involves self-regulation within the fintech sector.
Meanwhile, Das highlighted that based on the encouraging response received from several jurisdictions, the focus is now on making the Unified Payments Interface (UPI) and RuPay truly global. He further stated that the deployment of UPI-like infrastructure in foreign jurisdictions, facilitating QR code-based payment acceptance through UPI apps at international merchant locations, and interlinking UPI with Fast Payment Systems (FPS) of other countries for cross-border remittances are on top of the RBI’s agenda.
Additionally, the governor on Wednesday proposed five policy priorities for the future of India’s financial system. They include digital financial inclusion, digital public infrastructure (DPIs), consumer protection and cybersecurity, sustainable finance, and global integration and cooperation.
Das emphasised that while significant strides have been made in expanding financial inclusion by ensuring banking access to every village within a 5 km radius or hamlet of 500 households in hilly areas, and opening 530 million Jan Dhan bank accounts, the evolving landscape demands a shift towards digital financial inclusion (DFI), i.e., promoting secure and digitally enabled financial services and products for the financially excluded and underserved population.
“… the next two decades will predominantly be about leveraging technology to deliver accessible and tailored financial services that meet diverse needs,” Das said.
On DPIs, Das said that apart from banks and non-banking finance companies (NBFCs), the RBI is now focusing on the inclusion of other lenders like cooperative credit institutions through NABARD on the Unified Lending Interface, which the RBI is looking to launch in due course.
Earlier this week, Das had said that the RBI’s ULI will transform India’s lending sector, similar to how the Unified Payments Interface (UPI) revolutionised the payments ecosystem.
As far as consumer protection and cybersecurity are concerned, Das directed banks and fintech NBFCs to adopt a customer-centric approach; implement robust security measures; offer transparent financial products; and adopt fair lending practices.
“As financial transactions increasingly migrate online, the threat landscape is expanding exponentially. Investing in state-of-the-art technologies such as AI-driven threat detection, analysis, and mitigation, along with a clear focus on improving human resource capabilities, are necessary to bolster the resilience of information systems,” the governor said.
Commenting on sustainable finance, Das highlighted that in the following two decades, fintechs will be instrumental in driving progress in transition finance, climate finance, and nature-based solutions. “By harnessing the transformative power of technology and promoting innovation in sustainable finance, India can accelerate its transition towards a resilient and low-carbon economy,” he said.
First Published: Aug 28 2024 | 7:08 PM IST
