 "Economic Survey calls for identifying regulatory gaps in fintech sector")
There is a continuous need to identify regulatory gaps in fintech and to benchmark rules against global best practices, said the Economic Survey 2024 on Monday.
This observation comes as the country adopts emerging technologies such as artificial intelligence and machine learning (AI/ML), decentralised finance, and the Internet of Things (IoT).
Indian fintech is evolving and there is a high adoption rate of new technologies in financial services that are supported by digital public infrastructure (DPI) rails.
DPI, also known as the India Stack, includes foundational blocks of digital identification and payment infrastructure such as Aadhaar, digital payments through the Unified Payments Interface (UPI), and the account aggregator framework.
“These DPIs can be utilised on a shared basis by different players to ensure optimal outcomes. Their usage has brought transparency, scale operation, and timely delivery of financial services to the public,” said the survey.
Public and private financial sector firms need to become customer-centric. “An approach should be developed for common user data, such as Know Your Customer (KYC) across regulators. In the medium term, efforts should be made to move towards data-based lending instead of judgement-based lending, especially for small businesses,” the survey said.
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Calls for India to become a fintech nation and lead innovation in the financial services sector come on the back of greater adoption of payment services such as the National Payments Corporation of India (NPCI)-run UPI.
UPI transactions for the first time crossed 100 billion and closed at 131 billion in FY24.