This post covers the creation of a new Fintech Department by the RBI. It examines the reasons behind setting up a dedicated department and identifies issues which the Fintech Department is likely to prioritise.
In December 2021, PM Modi called for a fintech revolution in India. And just a month later, RBI took a key step in this direction by creating a new Fintech Department. Through the Department, RBI can identify prospects and snags for fintech. It can also harness fintech’s potential for socio-economic goals (like financial inclusion).
We discussed the creation of the RBI’s Fintech Department with Ram Rastogi, a digital payments expert. “There are over 2100 fintech companies in India, out of which more than 67% have been set up in the last five years. India’s fintech segment has also seen exponential growth in funding; investments worth more than US$8 billion were received across various stages of investment in 2021,” he said. “Looking at this exponential growth, RBI has taken a prudent step by establishing a dedicated department of fintech”, he added.
Some priorities for the Fintech Department may be fast-tracking CBDC launch and crypto-assets. The Fintech Department must also build its RegTech capacity. For this, it could take a cue from foreign regulators like the UK Financial Conduct Authority, which is already leveraging blockchain and APIs to automate regulatory reporting processes. The Fintech Department should inculcate an all-inclusive vision for the fintech ecosystem (beyond banks and NBFCs). Specially while implementing mandates like card-on-file tokenisation. And include stakeholders like merchants and payment aggregators in the consultations.
(This post has been authored by the fintech team at Ikigai Law.)