Steering committee on fintech-related issues submits report

The steering committee on fintech-related issues has recommended that the Department of Financial Services (DFS) works with public sector banks to bring in more efficiency and reduce security risks by leveraging artificial intelligence (AI), cognitive analytics and machine learning in back-end processes.

The committee, constituted by the Ministry of Finance, submitted its final report on Monday to Finance and Corporate Affairs Minister Nirmala Sitharaman.

It has recommended that a comprehensive legal framework for consumer protection be put in place early, keeping in mind the rise of fintech and digital services.

The report outlines current landscape in the fintech space within and outside the country, studies various issues relating to its development and makes recommendations on how fintech can be leveraged to enhance financial inclusion of micro, small and medium enterprises (MSMEs) to make regulations more flexible and generate enhanced entrepreneurship.

The report also identifies application areas and use cases in governance and financial services besides suggesting regulatory upgrades enabling fintech innovations.

The committee has recommended that the Reserve Bank of India may consider development of a cash-flow based financing for MSMEs, development of an open application programming interface MSME stack based on Trade Receivable Discounting System (TreDS) data validated by GST Network and a standardised and trusted e-invoice infrastructure designed around TReDS-GSTN integration.

It has suggested that insurance companies and lending agencies be encouraged to use drone and remote sensing technology for crop area, damage and location assessments to support risk reduction in insurance and lending business.

The committee highlighted positive impact of fintech innovations in sectors like agriculture and MSMEs. It recommended NABARD to take immediate steps to create a credit registry for farmers with special thrust for use of fintech along with core banking solutions by agri-financial institutions, including cooperative societies.

The report recommends a special drive for modernisation and standardisation of land records by setting up a dedicated National Digital Land Records Mission with involvement of state land and registration departments to making available land ownership data on an online basis to financial institutions.