RBI Starts A New Fintech Department For Creating Rules, Regulations For Startups
The RBI has established an internal fintech department that will focus on fintech innovation and related regulations.
It began operations from January 4, 2022.
In View Of ‘Changing’ Landscape
It will serve as the main point of contact in RBI for all fintech-related activities, including supervision and regulation.
Crypto issues are expected to fall under its purview as well.
It was put together in order to keep pace with the “dynamically changing landscape” of the fintech sector.
The department will promote innovation in the sector and identify challenges and opportunities that it will address in a “timely manner”.
Its push for innovation is mainly to bring down the cost of financial services and improve financial inclusion.
It will further provide a framework for research on the subject which can aid policy interventions by the Bank.
The department will also deal with matters pertaining to constructive innovations and incubations in the sector which holds wider implications for the financial sector and falls under the Bank’s purview.
Other matters related to inter-regulatory and internal coordination on fintech will also be handled.
The department will be headed by Ajay Kumar Choudhary who was recently promoted to executive director at the RBI.
He has 30 years of experience, having served in supervision, regulation, currency management, payments and settlements and other areas at the RBI.
Disruptions In The Sector
Fintech in India has seen several regulatory changes with new-age startups entering the financial services sector.
Most of these startups began operating as unregulated entities.
Last month, RBI extended the deadline for card tokenisation from January 1, 2022, to June 30, 2022.
Tokenisation refers to a replacement of an actual or clear card number with an alternate code called the “Token”.
Each token is a unique combination of card, token requestor and the merchant.
The date was extended after several requests from companies and industry bodies who needed more time to implement necessary changes.
Rules around card-based recurring payments were changed by the RBI last October.
Before payments for a subscription are deducted automatically from a customer’s account, the customer has to be notified beforehand and their consent must be sought.
This came as a disruption to consumers, small businesses, international subscriptions, and even internet giants such as Amazon, Netflix and Google.
Then earlier this month, coincidentally on Jan 4, RBI released a framework for offline digital payments to help increase the penetration of digital transactions.
It said that offline transactions (requiring no internet) can be made up to Rs 200 without needing additional factor authentication (AFA).