The Reserve Bank of India (RBI) has promoted its erstwhile fintech unit into its own department, marking an evolution of a move to address the increasing requirements of new technologies that began in June 2018. The fintech department within India’s central regulatory bank will be headed by Ajay Kumar Choudhary, who was recently promoted to the role of executive director of the RBI.
The RBI fintech department will work towards establishing a transparent regulatory environment, which in turn will seek to help innovation in the sector from startups and established corporates alike. The body will also look to address challenges in the Indian fintech sector, including regulatory issues and international coordination at a policy level.
The fintech department of RBI will report to its central administrative division. Going forward, more key tasks of this department would be to establish a framework for industry research, which in turn will help the central regulatory bank make policy interventions, as and when it deems fit.
The move to establish a standalone fintech department within the RBI has been a long time coming, starting with the creation of a fintech unit within the bank’s regulation department after a senior management committee meeting in June 2018. The following year, the unit came up with a regulatory sandbox framework for enabling India’s fintech companies and startups to engage with RBI -- with the eventual goal of easing innovations.
The fintech unit within RBI was subsequently transferred from the regulation department to the payments department, as the bank focused on helping the Indian fintech ecosystem bring down the cost of new-age, internet-enabled payment instruments. One of the key agendas of the RBI fintech unit, prior to this, has been to bring down the cost of financial inclusion through the aforementioned new-gen fintech tools.
The initial goal of the new department, as said in a reported internal RBI circular, is to “give further focus to the area and facilitate innovation in the fintech sector in keeping pace with the dynamically changing financial landscape.”
“All matters related to the facilitation of constructive innovations and incubations in the fintech sector, which may have wider implications for the financial sector or markets, and falling under purview of the bank, will be under the fintech department,” the circular further clarified.