FM Sitharaman asks RBI to hold monthly meetings with startup, fintech firms

The meeting comes at a time when RBI's action against Paytm Payments Bank has put the spotlight on regulatory compliance in fintech industry.

Bengaluru: Finance Minister Nirmala Sitharaman, on Monday, suggested that federal regulators, including the Reserve Bank of India (RBI), should hold virtual meetings on a fixed day every month with start-ups and fintech companies to address their concerns and issues, as per an official Finance Ministry statement.

Sitharaman was meeting with representatives of fintech companies, regulators and various government departments. Informed sources told DH that no ‘anxiety or concern’ related to the RBI’s recent action on Paytm Payments Bank was expressed by any of the start-up and fintech founders present at the meeting.

“During the meeting, it was emphasised that innovative solutions by the fintech companies are essential to the financial services sector while ensuring strict compliance with regulations,” the ministry said in its statement.

Sources said that the meeting had taken place after some fintech start-up founders had written to Sitharaman. It gained significance as it was being held in the backdrop of the RBI’s strong action against Paytm Payments Bank (PPB), and the regulator’s warning about unsecured retail lending, especially through fintech apps.

Sitharaman “exhorted the regulators, including RBI, that they may hold meetings via virtual mode once a month to discuss any questions/queries/concerns of the startups and fintech companies,” the statement said.

Additionally, it was decided in the meeting that the ministry’s Department of Financial Services will conduct a day-long workshop with law enforcement agencies wherein fintech ecosystem partners will be able to voice their concerns.

It was decided that cost of lending for critical areas including priority sectors should be rationalized and simplification and digitisation of KYC norms across all fintech segments should be carried out.

The RBI, Department for Promotion of Industry and Internal Trade (DPIIT) and Finance Ministry will look at the change of ownership holding or control of listed fintech companies to enable them to be in-sync with regulatory compliance, the statement said.

On their part, the startup and fintech companies present at the meeting appreciated the processes, regulations and efficacy of GIFT City and the International Financial Services Centre Authority and noted that they are creating new opportunities for the sector.

As per the statement, Sitharaman noted the rapid growth of the start-up and fintech sector in India, especially in the last decade, and welcomed suggestions from the fintech leaders to achieve greater ease of doing business and ease of living for consumers.

The meeting was also attended by Minister of State for Finance Bhagwat Karad, RBI Deputy Governor T Rabi Sankar, secretaries from various central government departments and industry bodies such as Fintech Association for Consumer Empowerment (FACE), Digital Lenders’ Association of India (DLAI), Payment Council of India (PCI), and Fintech Convergence Council (FCC).

India has approximately 10,244 fintech entities, it was informed during the meeting, making it the third biggest base for the sector in the world.