Regulators will have to adopt an entity-based regulation rather than an activity-based regulation because it will be far more effective. Moreover, regulators will also have to look at cybersecurity, systemic and operational risks, data protection and data privacy issues that affect the financial markets, when dealing with fintech companies which may range from big technology to large infrastructure companies.
“Regulation need to adapt to a world where the division between financial and non-financial firms are getting increasingly blurred and geographical boundaries are no longer a constraint”,said T Rabi Sankar, Deputy Governor, Reserve Bank of India at the Global Fintech Fest 2021.
The event was organized by NPCI, IAMAI, PCI and FCC and is supported by the Ministry of Electronics and Information Technology and the Reserve Bank of India.
Since FinTech firms are transforming the entire financial landscape, the nature of the regulation has to change— widen its regulatory parameter-- to take care of sheer diversity of the functions performed by FinTech companies. , he said.
He added that there were no pre-defined regulations for FinTech in the world and so banks will have to learn to adopt to changes. Moreover, non-financial firms will also need to adjust to the compliance issues of the regulators.
Sankar underscored the need for all stakeholders to come together for the protection of the individual and collaborations between different agencies to take care of issues of cybersecurity, cybercrime, and cross-border payments.
Fintech firms, he added, will play a role of a facilitator and supporting role to the banks and not provide competition to the banks or financial institutions, because banks are providers of financial liquidity to the economy and will continue to play a crucial role in the payment system. However, because of the FinTech’s speed in processing of information, and delivery, which reduces costs and time while enhancing connectivity and reach of the transaction, they will ensure which banks will survive or not. Those banks that partner with these FinTech will obviously turn out to be the winners.
Connected data ecosystem to enable digital growth
Addressing the second edition of the Global Fintech Fest 2021, MeitY Secretary, Ajay Prakash Sawhney stated, “UPI represents one effort towards healthy ecosystem in the financial sector, account aggregator represents another important step. In healthcare, the National Digital Health Mission is creating such a digital ecosystem, where people using their health ID and personal health records will be able to take advantage of a connected health ecosystem, pan-India”. He added, “Similar platforms are developing in the fields of education, agriculture, logistic, rural development and welfare scheme and criminal justice system.”
Sawhney’s advice to entrepreneurs was to “understand the magic of these platforms…To become the member of the ecosystem, through regulatory sandboxes, which would give them an entry into a responsible system where data is organised on a pan-India basis”.
He urged every service provider to be mindful of provisions of data privacy provided by Indian laws to the citizens and residents and be compliant with them.
The first day of the Fest was attended by over 8,000 delegates.
Over eight thousand delegates attended the first day of the conference which is being held virtually.
Internet and Mobile Association of India [IAMAI] is a young and vibrant association with ambitions of representing the entire gamut of digital businesses in India. It was established in 2004 by the leading online publishers, and in the last 16 years has come to effectively address the
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