FSDC meet discusses ways for simplification, digitisation of KYC process

Take more steps to curb illegal lending apps: FM

The Financial Stability and Development Council (FSDC), an apex-level body constituted by the government, met here on Wednesday to discuss formulating a strategy to simplify and digitalise Know Your Customer (KYC) process in the financial sector. The meeting assumed greater significance amid the heightened regulatory scrutiny of the financial sector, especially the clampdown on Paytm Payments Bank for persistent non-compliance of KYC and other norms.    

Chairing the 28th FSDC meeting, Finance Minister Nirmala Sitharaman also asked financial sector regulators to take further mea­sures to check the spread of unauthorised lending through online apps and its harmful effects, according to a statement issued by the ministry.

“The FSDC considered the domestic and global macro-financial situation and emphasised that the members need to maintain constant vigilance and continue their proactive efforts towards detecting emerging financial stability risks and taking necessary measures to maintain the resilience of the sector,” the statement said.  

The FSDC, which acts like a super regulator with heads of financial regulators as its members, deals with issues relating to financial stability, inter-regulatory coordination and macro prudential supervision of the economy among other things.

Besides the action on Paytm Payments Bank, the central bank had also recently imposed restrictions on a card network for commercial transactions routed through intermediaries. The RBI had not named the network.    

The meeting deliberated on the ways of prescribing uniform KYC norms and inter-usability of KYC records across the financial sector. The ongoing inter-regulatory issues to support GIFT IFSC in its strategic role in facilitating foreign capital and financial services for the domestic economy also came up. The meeting also focused on various issues related to formulation of strategy to implement decisions of the FSDC and the Union Budget announcements, besides exchanging views on kickstarting fund-raising by social enterprises through social stock exchanges.  

RBI governor Shaktikanta Das, Securities and Exchange Board of India chairperson Madhabi Puri Buch, Insurance Regulatory and Development Authority of India chairman Debasish Panda, chief economic adviser V Anantha Nageswaran and other finance ministry bureaucrats attended the meeting.

To allay the fears of the fintech industry in the backdrop of the recent RBI actions, Sitharaman has called a meeting of top executives of the sector on February 26. The meeting is expected to discuss both regulatory compliance as well as promoting innovation in the sector.