Report urges RBI to mandate the central KYC processes for lenders, simplify prescriptive requirements
Bengaluru/New Delhi: The government should liaise with financial technology firms for distribution of financial benefits and relief measures amid the covid crisis, said a new report by industry body the Federation of Indian Chambers of Commerce and Industry (Ficci) and multinational professional services firm PwC.
“The need for digital awareness and presence is prominently recognized by individuals, businesses, and governments alike. Fintechs can act as enablers for the banking and financial sector, playing a crucial role in ubiquity and adoption of digital financial services. A few measures related to policy and regulation can support the fintech sector during the ongoing crisis," the report said.
There is a need to further promote digital payments and banking amid fears that the use of cash may spread infection, it said.
“In line with this, the government is advised to reinstate subsidies for digital payments for transactions below ₹2,000," it said.
The report urged the RBI to mandate the central KYC processes for all lenders at the earliest and simplify prescriptive requirements, such as the presence of a bank officer on the other side during an interaction, while encouraging the development of collaborative solutions for video-KYC between banks and fintech firms.
Earlier, the RBI had announced a moratorium on term loan repayments for six months and a similar moratorium for interest payments on working capital loans for three months. However, the benefits of the moratorium did not apply to digital lending firms and their borrowers. In line with this, it recommended that the central bank provide similar relief to online lenders.
In March, the Digital Lenders Association of India had written to the Centre and RBI for extending the relief measures to the sector.
“Customers are doing a lot on their own (opening accounts and payments) and if this behaviour sticks, a lot of costs around providing services can be reduced," Sayali Karanjkar, co-founder, PaySense, a digital lender, said at the webinar ‘Future of Fintech in light of Covid-19’, organized by Ficci on Wednesday.