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Indian Economy

Steering Committee on Fintech

  • 04 Sep 2019
  • 4 min read

Recently, the Steering Committee on Fintech has submitted its final report to the Ministry of Finance.

  • The Committee was constituted in pursuance to the announcement made in Budget Speech 2018-19.

Recommendations of the Report

Cash flow-based financing

  • In cash flow lending, a financial institution grants a loan that is backed by the recipient’s past and future cash flows.
  • This means a company borrows money from expected revenues they anticipate they will receive in the future.
  • Credit ratings are also used in this form of lending as an important criterion.
  • The advantage of this method is that a company can possibly obtain financing much faster, as an appraisal of collateral is not required.
  • To support risk reduction in the insurance business, it recommended that insurance companies and lending agencies to be encouraged to use drone and remote sensing technology for crop area, damage and location assessments.
  • The Department of Financial Services can work with public sector banks to bring in more efficiency to their work and reduce fraud and security risks.
    • Significant opportunities can be explored to increase the levels of automation using Artificial Intelligence (AI), cognitive analytics & machine learning in their back-end processes.
  • National Bank for Agriculture and Rural Development (NABARD) to take immediate steps to create a credit registry for farmers with special thrust for use of fintech.
  • A comprehensive legal framework for consumer protection in the context of the rise of fintech and digital services.
  • The adoption of Regulation Technology (RegTech) and Supervisory technology (SupTech) by all financial sector regulators.


  • It is the management of regulatory processes within the financial industry through technology.
  • The main functions of Regtech include regulatory monitoring, reporting, and compliance.
  • RegTech uses cloud computing technology through software-as-a-service (SaaS) to help businesses comply with regulations efficiently and less expensively.
  • The rise in digital products has increased data breaches, cyber hacks, money laundering, and other fraudulent activities.


  • It helps supervisory agencies to digitize reporting and regulatory processes, resulting in more efficient and proactive monitoring of risk and compliance at financial institutions.
  • Suptech is currently found in two areas of applications: data collection and data analytics.
  • The Department of Financial Services and the Reserve Bank of India may examine the suitability of virtual banking system.
    • The virtual banking system is a system where banks do not need to set up branches and yet deliver the full-scale retail banking services ranging from extending loans, savings accounts, issuing cards and offering payment services through their app or website.
  • The usage of common fintech platform for Micro Units Development and Refinance Agency (MUDRA) loans, small saving schemes, pension schemes and provident fund.
  • Reforming the current peer-to-peer (P2P) lending platforms.
  • Further, an Inter-Ministerial Steering Committee will be set up on fintech applications by Ministry of Finance, to continue to carry on the tasks of implementing this report.

Source: BS

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