A committee on financial technology (fintech) has recommended forming of an inter-ministerial group on fintech at the Ministry of Electronics and Information Technology (MeitY), for exploring the application of the technologies like open application programming interfaces (APIs), blockchain, robo-advisors, big data analytics, and national data sharing and accessibility policy for use in government processes like welfare, taxation, and handling citizen grievances.
The committee submitted its report to Finance Minister Nirmala Sitharaman on September 2.
The committee, which was constituted after the 2018-19 budget, suggested that the inter-ministerial group should make recommendations on technology choices, providing inter-ministerial inputs to fintech working groups in each ministry on the requirements of different departments.
“The group can also perform the role of periodically reviewing the technological systems and scope for introduction of new technologies in a coordinated manner across the Central Government,” the report said.
The report also says that the Reserve Bank of India may consider developing a cash-flow based financing for micro, small and medium enterprises (MSMEs), setting up of an open-API MSME stack-based on TReDS data, validated by the Goods and Services Tax Network (GSTN) and a standardised and trusted e-invoice infrastructure designed around TREDS-GSTN integration.
It has also recommended that insurance companies and lending agencies should use drone and remote sensing technology for crop area, damage and location assessments to support risk reduction in insurance/lending business.
The committee recommended that the Department of Financial Services(DFS) should work with public sector banks to bring in more efficiency to their work and reduce fraud and security risks.
“Significant opportunities can be explored to increase the levels of automation using Artificial Intelligence (AI), cognitive analytics & machine learning in their back-end processes,” the report says.
The report also highlights the positive impact of fintech innovations on sectors such as agriculture and MSMEs. It recommended NABARD to take immediate steps to create a credit registry for farmers with special thrust for use of fintech along with core banking solutions (CBS) by agri-financial institutions, including cooperative societies.
The committee recommended modernisation and standardisation of land records by setting up a dedicated National Digital Land Records Mission based on a common national land records standard with the involvement of state Land and Registration departments, in order to make available land ownership data on an online basis to financial institutions.
It also suggested a comprehensive legal framework for consumer protection to be put in place at the earliest, keeping in mind the rise of fintech and digital services.
It has also recommended the adoption of regulation technology by all financial sector regulators. It has also recommended that financial sector regulators develop an institutional framework for specific use-cases of supervisory technology (or SupTech), testing, deployment, monitoring, and evaluation.
“A dedicated team on digital economy and fintech is being set up in the investment division, department of economic affairs, ministry of finance for coordination on fintech with relevant ministries,” the government said in a press release.
The committee is headed by the secretary, department of economic affairs (DEA). The other members of the committee are Secretary (MeitY); Secretary (DFS); Secretary (MSME); Chairperson (CBIC); CEO (UIDAI); Deputy Governor (RBI); Executive Director (SEBI); CEO, Invest India with Additional Secretary (Investment), DEA as the convener of the panel.Subscribe to Moneycontrol Pro and gain access to curated market data, trading recommendations, stock analysis, investment ideas and insights from market gurus. Now, get Moneycontrol PRO for 1 year at Rs 289. Use code FREEDOM.