Fintech
Continuous review needed to identify regulatory gaps in fintech sector – Budget 2024 news
A continuous review process is needed to identify regulatory gaps in the fintech sector and align it with global best practices, the Economic Survey said. The focus should be on the transition from judgment-based lending to data-based lending, it said.
“In the medium term, efforts should be made to shift towards data-based lending rather than judgment-based lending, especially for small businesses. In this regard, there is a need for an ongoing review to identify regulatory gaps/overlaps and compare them with global best practices,” the survey said.
Artificial intelligence and machine learning, decentralized finance, and the Internet of Things have enormous potential to revolutionize the digital payments ecosystem.
The government has launched flagship programs, including the Digital India Mission and Realization Indiato fuel fintech growth. Rapidly growing population, world-class public digital infrastructure, and proactive regulations have supported the industrygrowth, making India one of the fastest growing fintech markets in the world.
“The vision is for India to evolve as a ‘fintech nation’ with the highest number of fintech companies and the highest adoption rate by incumbents, fueled by public digital infrastructure. A common user data approach, such as KYC (know your customer), should be developed across regulators,” the survey said.
According to the National Payments Corporation of India, the Indian fintech sector is estimated to be worth around $110 billion in 2024 and is expected to reach $420 billion by 2029, registering a compound annual growth rate of 31%.
With over 9,000 fintechs, India ranks third globally in terms of number and accounts for 14% of startup funding. India’s fintech adoption rate is 87%, well above the global average of 67%.
According to the survey, robust public digital infrastructure has played a key role in driving digital transformation by providing transparent and citizen-centric governance services.
“More emphasis has been given to creating digital public infrastructures such as Aadhaar, e-KYC, Aadhaar-enabled Payment System, UPI, Bharat QR, DigiLocker, e-sign, Account Aggregator, Open Network for Digital Commerce, etc. Their use has brought transparency, large-scale operations and timely delivery of financial services to the public,” the survey noted. “These digital public infrastructures can be used on a shared basis by different players to ensure optimal outcomes.”
The fintech ecosystem is expected to continue to proliferate, driven by factors such as favorable policies, development and existence of enabling IPRs, institutional support, and technological innovations. The government’s push towards a digital economy economycoupled with a young, tech-savvy population, is set to push the fintech sector to new heights.