rbi: RBI MPC meeting: Key takeaways for the fintech sector

Overall the banking regulator announced multiple steps to help expand the scope of operations for the country’s fintech ecosystem. From announcing a repository for fintech lenders to increasing the limits for recurring payments for e-mandates, there was much for the fintech industry to look at.

The RBI Monetary Policy Committee unanimously decided to keep the repo rate, i.e., the key lending rate, unchanged at 6.5%. The rate-setting panel also left the policy stance unchanged with a focus on the withdrawal of accommodation.

Here are the other key takeaways for the fintech sector from the meeting:

Recurring online transactions: The e-mandate for online recurring transactions has been increased from Rs 15,000 to Rs 1 lakh for mutual fund subscriptions, insurance subscriptions and credit card transactions. The number of e-mandates registered currently stands at 8.5 crore, processing nearly Rs 2,800 crore of transactions per month, the RBI said.

Fintech regulatory framework: The RBI will create a fintech repository that will be operational by April 2024 or earlier. It will be run by the RBI’s Innovation Hub. The rationale behind this framework is to better understand developments in the fintech ecosystem as financial entities such as banks and non-banking financial companies (NBFCs) are increasingly partnering with them. “Fintechs are encouraged to provide information voluntarily to this repository,” Das said.

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At a time when multiple dubious fintech lending apps are operational, the hope is that this move will help control unregulated businesses. “This becomes much more important, especially in the context of emerging issues such as unauthorised lending apps and cyber frauds. It will definitely help regulatory and law enforcement agencies as well as end users to make a clear distinction between the good and bad actors,” said Jatinder Handoo, CEO, Digital Lenders’ Association of India.

Web aggregation of loan products: The RBI said that several concerns relating to web-aggregation of loan products harming consumers’ interests have come to its notice. Considering this, the central bank has decided to lay down a regulatory framework for web aggregation of loan products to enhance customer centricity and transparency in digital lending. Multiple online marketplaces that operate in partnership with lenders to offer credit cards and personal loans, will get regulated through these guidelines.

Cloud facility: The RBI is working to build a cloud facility for the financial sector as more banks and financial institutions use data. The facility aims to enhance data security, integrity and privacy and facilitate better scalability and business continuity. The facility is intended to be rolled out in a calibrated fashion over the medium term.

Overall the banking regulator announced multiple steps to help expand the scope of operations for the country’s fintech ecosystem. From announcing a repository for fintech lenders to increasing the limits for recurring payments for e-mandates, there was much for the fintech industry to look at.

The RBI Monetary Policy Committee unanimously decided to keep the repo rate, i.e., the key lending rate, unchanged at 6.5%. The rate-setting panel also left the policy stance unchanged with a focus on the withdrawal of accommodation.

Here are the other key takeaways for the fintech sector from the meeting:

Recurring online transactions: The e-mandate for online recurring transactions has been increased from Rs 15,000 to Rs 1 lakh for mutual fund subscriptions, insurance subscriptions and credit card transactions. The number of e-mandates registered currently stands at 8.5 crore, processing nearly Rs 2,800 crore of transactions per month, the RBI said.

Fintech regulatory framework: The RBI will create a fintech repository that will be operational by April 2024 or earlier. It will be run by the RBI’s Innovation Hub. The rationale behind this framework is to better understand developments in the fintech ecosystem as financial entities such as banks and non-banking financial companies (NBFCs) are increasingly partnering with them. “Fintechs are encouraged to provide information voluntarily to this repository,” Das said.

Discover the stories of your interest

At a time when multiple dubious fintech lending apps are operational, the hope is that this move will help control unregulated businesses. “This becomes much more important, especially in the context of emerging issues such as unauthorised lending apps and cyber frauds. It will definitely help regulatory and law enforcement agencies as well as end users to make a clear distinction between the good and bad actors,” said Jatinder Handoo, CEO, Digital Lenders’ Association of India.

Web aggregation of loan products: The RBI said that several concerns relating to web-aggregation of loan products harming consumers’ interests have come to its notice. Considering this, the central bank has decided to lay down a regulatory framework for web aggregation of loan products to enhance customer centricity and transparency in digital lending. Multiple online marketplaces that operate in partnership with lenders to offer credit cards and personal loans, will get regulated through these guidelines.

Cloud facility: The RBI is working to build a cloud facility for the financial sector as more banks and financial institutions use data. The facility aims to enhance data security, integrity and privacy and facilitate better scalability and business continuity. The facility is intended to be rolled out in a calibrated fashion over the medium term.