Even as the Steering Committee on Fintech Related Issues made a series of recommendations to the Finance minister Nirmala Sitharaman on Monday to expand fintech services and leverage it for financial inclusion, trade and regulatory think-tank Cuts International has asserted the need to figure out the hurdles in the adoption of the suggested measures and working out a roadmap to implement them. “While the committee made recommendations but it should have highlighted roadblocks in their adoption and what could be the roadmap in their implementation by solving for major problem areas of relevant stakeholders in it,” Pradeep S Mehta, Secretary General, CUTS International told Financial Express Online.
The committee, with respect to MSMEs, had said that the Reserve Bank of India may look at having a cash-flow based financing for MSMEs, developing an open-API MSME stack based on TReDS data that is validated by GSTN along with a standardised and trusted e-invoice infrastructure designed around TREDS-GSTN integration, according to a statement by the ministry.
Also read: Fintech to the aid of MSMEs: Cash-based financing, e-invoicing for GST could soon be reality
The report, according to Cuts, could have stressed on “institutionalising Regulatory Impact Assessment Framework in regulation making” and building required capability to enable regulators to consider costs and benefits of different regulatory options and enact optimal regulations.
The Steering Committee had also suggested setting up of a legal framework catering to consumer protection with the growth of fintech and digital services in India. However, according to Mehta, the government “needs to resist the temptation of establishing new regulatory structures, which more often than not, act as sinecures, adding additional bureaucracy. The recently enacted Consumer Protection Act of 2019 should be leveraged to protect and empower fintech consumers.”
The recommendations were made by the committee while highlighting the positive impact of fintech innovations on MSME and agriculture sectors — the top two sectors in terms of employment generation in India.