RBI Recognises FACE as a Self-Regulatory Organisation in Fintech Sector

Mumbai, Aug 29 (KNN) The Reserve Bank of India (RBI) has taken a significant step in regulating the burgeoning fintech sector by recognising the Fintech Association for Consumer Empowerment (FACE) as a self-regulatory organisation (SRO).

This development, announced by RBI Governor Shaktikanta Das at the Global Fintech Fest on Wednesday, is expected to enhance consumer protection and ensure a balanced approach to innovation and regulation within the industry.

The decision follows RBI's call for applications for SROs in the fintech sector, with three applications initially received. According to Governor Das, one application has been returned with provisions for resubmission after meeting specific criteria, while the third remains under examination.

The Digital Lenders Association of India (DLAI), one of the applicants, confirmed that their application had not been returned and expressed anticipation for further communication from the regulator.

Governor Das emphasised that the role of SROs would be crucial in fostering regular consultations, feedback mechanisms, and policy dialogues.

This will facilitate open communication and help fintech companies stay informed about regulatory expectations and priorities. "Our endeavour is to carefully craft regulations to achieve this delicate balance, while simultaneously ensuring trust, security, accessibility, risk management, and competition," Das stated.

The recognition of FACE as an SRO is part of the RBI's broader strategy to ensure the sustainable and orderly development of the fintech sector.

Das highlighted the importance of a balanced approach between innovation and prudent regulation, advocating for self-regulation within the fintech ecosystem.

He underscored that banks and fintech non-banking financial companies (NBFCs) must adopt customer-centric approaches, robust security measures, and fair lending practices to ensure transparent financial products.

Looking ahead, Das outlined five policy priorities for India's financial system: digital financial inclusion, digital public infrastructure (DPI), consumer protection and cybersecurity, sustainable finance, and global integration and cooperation. He noted that the next two decades would see a significant focus on leveraging technology to deliver accessible and tailored financial services.

Additionally, the RBI is working towards making the Unified Payments Interface (UPI) and RuPay card network global. Efforts include deploying UPI-like infrastructure in foreign jurisdictions and interlinking UPI with Fast Payment Systems (FPS) of other countries for cross-border remittances.

Das noted significant progress in countries such as Bhutan, Nepal, Sri Lanka, Singapore, the UAE, Mauritius, Namibia, Peru, France, and others.

On sustainable finance, Das pointed out that fintechs will play a pivotal role in the next two decades, particularly in areas such as transition finance and climate finance. Despite challenges, such as scalability and ensuring the authenticity of green projects, technology could help overcome these hurdles and expand the market for green bonds and green deposits.

As the financial landscape continues to evolve, the RBI's proactive measures, including the recognition of FACE as an SRO, demonstrate its commitment to fostering a resilient, inclusive, and sustainable fintech ecosystem in India.

(KNN Bureau)