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. Vishwanathan said.
Speaking at the Nasscom India FinTech event in Mumbai, Mr. Vishwanathan 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 a lower cost, has been a buzzword across the world in recent years, with little or no regulation over their functioning.
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KPMG in India and a Nasscom report released on Tuesday have forecast that the Indian FinTech market is set to double to $2.4 billion in the next four years. It is in a nascent stage in the country, and many feel that start-up firms in the space would disrupt the traditional banking and financial services model.
The committee, to be headed by Mr. Vishwanathan, will have representatives from other regulators such as Securities and Exchange Commission of India, Insurance Regulatory Authority of India, banks and other stakeholders.
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Mr. Vishwanathan said that 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 that it will result in financial dis-intermediation, and we have to see how the banking system should handle that.”
Among the kinds of FinTech that the RBI is promoting are the Unified Payments Interface and the Bharat Bill Payments System, he said. Some areas in which FinTech has emerged include payments, peer-to-peer lending, and the use of automated algorithms to offer financial advice.
RBI is also now looking at the new age tech. It recently released a consultation paper on peer-to-peer lending.