A panel has been set up to revolutionise the finance technology (FinTech) sector. The panel aims to develop a marketplace model for peer-to-peer (P2P) lending, use drones for field assessments, virtual banking to allow lenders to function without physical branches, and artificial intelligence (AI) to reduce frauds.
The panel’s report recommends that a review of the existing regulatory framework is necessary with respect to data protection and privacy concerns. This is essential to keep up with the emerging data privacy legislation, it said.
It also recommended that small savings schemes such as National Savings Certificates be moved to a dematerialised format. That is, the committee has proposed extreme digitisation of land records as well. While at this, the committee did not miss mentioning the importance of putting in place a legal framework to protect consumers.
In order to implement these recommendations, the government has set up an inter-ministerial committee within the Department of Economic Affairs. This committee constituted the ex-Finance Minister Arun Jaitley, the secretary in the Department of Economic Affairs, and other senior officials from various departments, Reserve Bank of India, and SEBI.
On the digital payments front, the committee expressed that non-discriminatory access must be the primary norm unless there are convincing reasons to treat a category of firms differently. The committee suggests the Department of Financial Services and RBI get together to verify the applicability of virtual banking in the Indian context, the associated expenses, and benefits.
The suggestions are considered to be a preparation for the future where banks need not have branches set up but can still provide full-scale services such as extending loans, opening savings accounts, issuing cards, and payment services offered through the app.
The panel takes the responsibility of developing standards and use cases for the Regulation Technology (RegTech), to be followed by the FinTech firms to make compliance with the regulations easier and quicker.