New Delhi, Sep 3 (KNN) The Steering Committee on Fintech related issues has recommended that the RBI may consider development of a cash-flow based financing for MSMEs, development of an open-API MSME stack based on TReDS data validated by GSTN and a standardized and trusted e-invoice infrastructure designed around TREDS-GSTN integration.

Constituted by the Ministry of Finance, Department of Economic Affairs, the Committee has submitted its final report to Union Finance & Corporate Affairs Minister Nirmala Sitharaman.

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

Given the rapid pace at which technology is being adopted primarily by private sector financial services, the Committee recommends Department of Financial Services(DFS) to work with PSU banks to bring in more efficiency to their work and reduce fraud and security risks. Significant opportunities can be explored to increase the levels of automation using Artificial Intelligence (AI), cognitive analytics & machine learning in their back-end processes.

The Committee has highlighted the positive impact of Fintech innovations on sectors such as Agriculture and MSMEs. And it has 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 (CBS) by agri-financial institutions, included Cooperative societies.

The Committee also recommends a comprehensive legal framework for consumer protection be put in place early keeping in mind the rise of fintech and digital services.  

It has also recommended adoption of Regulation technology (or RegTech) by all financial sector regulators to develop standards and facilitate adoption by financial sector service providers to adopt use-cases making compliance with regulations easier, quicker and effective.

Similarly, it has also recommended that financial sector regulators develop an institutional framework for specific use-cases of Supervisory technology (or SupTech), testing, deployment, monitoring and evaluation.

Further, an Inter-Ministerial Steering Committee will be set up on fintech Applications in Department of Economic Affairs (DEA), Ministry of Finance, to continue to carry on the tasks of implementing this report, including exploring and suggesting the potential applications in government financial processes and applications, particularly accounting and asset management, welfare services, taxation, and handling citizen grievances.

While the Inter-Regulatory Technical Group (IRTG) set up under the FSDC will be the forum of inter-regulatory coordination on Fintech.

The Steering Committee, which submitted the report, is headed by Secretary, Department of Economic Affairs.