Finance Minister Nirmala Sitharaman exhorted the banking regulator Reserve Bank of India (RBI) to hold meetings via virtual mode once a month to discuss any questions, queries and concerns of start-ups and fintech companies.
The Ministry of Finance, along with RBI and the Department for Promotion of Industry and Internal Trade (DPIIT), will look at the change of ownership holding and control of listed fintech companies to enable them to be in sync with regulatory compliance.
Sitharaman chaired a meeting with India's start-up and fintech entities in New Delhi on Monday. The interaction with the start-up and fintech ecosystem partners was organised to enable the free exchange of ideas to bolster and scale up operations to facilitate global competitiveness by enabling growth in the fintech sector.
India has around 10,244 fintech entities. The number of start-ups 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.
Sitharaman also asked the Department of Financial Services (DFS) to conduct a workshop with law enforcement agencies for fintech ecosystem partners to voice their issues and concerns.
The stakeholders agreed on simplification and digitisation of KYC (know your customer) across all fintech segments. They also suggested rationalisation of cost of lending or funding for critical areas including priority sectors.
The Union finance minister noted the rapid growth of the start-up and fintech sector of India, especially in the last decade, and welcomed suggestions from the fintech leaders to achieve greater Ease of Doing Business and Ease of Living for consumers.
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 Aadhaar, UPI (Unified Payments Interface), API (Application Programming Interfaces) Setu among others have acted as enablers for start-ups and fintechs and simplified incorporation of companies, and recognition of peer-to-peer lenders as non-banking financial companies (NBFCs) among others.
DPIIT says that new patent examiners have been added which will reduce the turn-around time of patent applications. Issues about cybercrime will be suitably addressed in the new Digital India Act, the minister says.
The Union finance minister also noted that India's fintech ecosystem is the third largest in the world and growing at 14% Compound Annual Growth Rate (CAGR).
The startup and fintech entities appreciated the processes, regulations and efficacy of GIFT City and the International Financial Services Centres Authority (IFSCA) and noted that they are creating new opportunities for the startups and fintechs.
The RBI had recently floated a draft framework for recognition of Self-Regulatory Organisation (SRO) for the fintech sector for stakeholder's consultation.
