The Reserve Bank of India is in the process of setting up a multi-disciplinary committee to study the FinTech business in India, its executive director N.S. Viswanathan said.
Speaking at a Nasscom India FinTech event in Mumbai, Mr. Viswanathan said: “The committee would see what kind of FinTech business is happening in India, what kind should be ‘allowed to happen’ and how to create an ecosystem to ensure the ‘right kind’ of FinTech is promoted.”
FinTech, which means using technology to offer financial services to end customers at lower cost, has caught on across the world in recent years. Mostly, these businesses are not regulated.
KPMG in India and a Nasscom report released on Tuesday forecast Indian FinTech market to double to $2.4 billion in the next four years from $1.2 billion. It is in a nascent stage in the country, and many feel startup firms in the space would disrupt the traditional banking and financial services model.
The committee, to be headed by Mr. Viswanathan, will have representatives from other regulators such as Securities and Exchange Commission of India, Insurance Regulatory Authority of India, banks and other stakeholders. Mr. Viswanathan said the use of FinTech in India has to be consistent with the risks the financial system could bear. “There are some risks involved. What is clear is it will result in financial dis-intermediation, and we have to see how the banking system should handle that.”
As examples of the kind of FinTech the RBI is promoting, he mentioned the Unified Payments Interface and the Bharat Bill Payments System. Some of the areas in which FinTech has emerged include payments, peer-to-peer lending, and the use of automated algorithms to offer financial advice or in other words, Robo Advisory. RBI is looking at new-age tech. It recently released a consultation paper on peer-to-peer lending.
Reports forecast Indian FinTech market to double to $2.4 billion in the next four years from $1.2 billion.
