The latest step in a long list of technological advances has seen the Reserve Bank of India putting together an inter-regulatory working group to tackle the regulatory issues relating to fintech and digital banking in the country, according to a circular on the website of the RBI.
Mindful of its growing importance, the WG’s mandate is to scope the developments in the fintech realm including innovations, entities, technology platforms involved and how markets are adopting new products. The move is designed to review and appropriately reorient the regulatory framework and respond to the dynamics of the rapidly evolving fintech scenario.
Furthermore, the panel will assess opportunities and risks arising from digitization and the use of the financial technology, and how these can be utilised for optimizing financial product innovation. Implications and challenges for the various financial sector functions would be noted as well, including intermediation, clearing, payments being taken up by non-financial entities.
The working group will submit its report within six months from the date of its first meeting, the circular further states.
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Over the last few years, the financial services sector in India has seen a number of fintech initiatives popping up, while digital firms such as mobile wallets and online credit providers have become mainstream.
At a meeting held on April 26, 2016, a sub-committee of the Financial Stability and Development Council, a group of various financial regulators, had decided to set up the 13-member panel of the WG, which will be chaired by Sudarshan Sen, executive director at the RBI. Aside from key employees of the central bank, the WG consists of representatives from National Payments Council of India (NPCI), the Securities and Exchange Board of India (SEBI), Insurance Regulatory and Development Authority (IRDA), Pension Fund Regulatory and Development Authority (PFRDA), representatives from HDFC and State Bank of India.
According to the RBI statement: “The Working Group has been set up in view of the growing significance of FinTech innovations and their interactions with the financial sector as well as the financial sector entities.”
The WG has also been tasked to examine cross country practices in the matter, and to study models of successful regulatory responses to disruption across the globe. In addition, the panel will scope any other matter relevant to the fintech issues.
Among the terms of reference of the working group is the right to invite views from representatives of any area relevant and may also at its discretion co-opt entities in the payment, telecom, software and start up ecosystem.