RBI Sets Up a Fintech Department

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RBI Fintech Department: Relevance

GS 3: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

Recently, Reserve Bank of India (RBI) has set up a fintech department to focus on the “dynamically” growing financial sector.

RBI said that the decision to set up a fintech department in the Bank was taken to focus on the area and facilitate innovation in fintech sector in keeping pace with the dynamically changing financial landscape.
The new department has been created by subsuming the FinTech Division of Department of Payment and Settlement Systems, Central Office (DPSS, CO).
The department will be headed by Ajay Kumar Choudhary, executive director of the RBI.
The fintech department will report to its central administrative division.

The department will promote innovation in the fintech sector.
It will also identify the challenges and opportunities associated with it and address them in a timely manner.
It will also provide a framework for further research on the subject that can aid policy interventions by the Bank.

All matters related to the facilitation of constructive innovations and incubations in the fintech sector, which may have wider implications for the financial sector and falling under the purview of the Bank, will be dealt with by the fintech department.
All matters related to inter-regulatory coordination and international coordination on fintech shall also be dealt with by the department.
The department will work towards establishing a transparent regulatory environment, which in turn will seek to help innovation in the sector.

FinTech is generally described as an industry that uses technology to make financial systems and the delivery of financial services more efficient.
FinTech is broadly used to describe emerging technological innovations in the financial services sector, with ever increasing reliance on information technology.

In India, FinTechs and digital players could function as the fourth segment of the Indian financial system, alongside large banks, mid-sized banks including niche banks, small finance banks, regional rural banks and cooperative banks.
It has the potential to fundamentally transform the financial landscape where consumers will be able to choose from broader set of alternatives at competitive prices, and financial institutions could improve efficiency through lower costs.
India has emerged as the fastest growing FinTech market and the third largest FinTech ecosystem in the world.
The rapid and transformational changes in financial services brought on by FinTechs need to be continuously monitored and evaluated.
Regulators need to be creative, nimble and tech savvy with their approach.