A continuous review process is needed to identify regulatory gaps in the fintech sector and align it with global best practices, the economic study said. The focus should be on transitioning from judgment-based lending to data-driven lending, he said.
“In the medium term, efforts should be made to move towards data-driven lending rather than judgment-based lending, particularly for small businesses. In this regard, continuous review is required to identify regulatory gaps/overlaps and benchmark them against global best practices,” the survey said.
Artificial intelligence and machine learning, decentralized finance and the Internet of Things have vast potential to disrupt the digital payments ecosystem.
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The government has launched flagship projects, including the Digital India Mission and achievement Indiato fuel the growth of fintechs. Rapidly growing population, world-class digital public infrastructure and proactive regulations have supported the industrymaking India one of the fastest growing fintech markets in the world.
“The vision is for India to evolve as a ‘fintech nation’ with the largest number of fintech companies and the highest adoption rate by incumbents, powered by digital public infrastructure. An approach should be developed for common user data, e.g. KYC (know your customers), between regulators,” the survey said.
India’s 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%, according to the National Payments Corporation of India.
With over 9,000 fintechs, India ranks third in the world in terms of numbers and holds 14% of startup funding. India’s fintech adoption rate is 87%, well above the global average of 67%.
According to the survey, strong digital public infrastructure has played a central role in digital transformation, providing transparent and citizen-centric governance services.
“Greater emphasis has been placed on creating digital public infrastructure such as Aadhaar, e-KYC, Aadhaar enabled payment system, UPI, Bharat QR, DigiLocker, e-sign, Account Aggregator, Open Network for Digital Commerce, etc. usage has brought transparency, large-scale operation and timely provision of financial services to the public,” the survey notes. “These digital public infrastructures can be used on a shared basis by different actors to ensure optimal results. »
The fintech ecosystem is expected to continue to proliferate, driven by factors such as enabling policies, the development and existence of enabling IPDs, institutional support and technological innovations. Government efforts towards digital economycoupled with a young, tech-savvy population, is likely to propel the fintech sector to new heights.