The government should reinstate subsidies for digital payments for transactions below Rs 2,000 and implement Aadhaar-based e-KYC authentication for financial technology (fintech) firms, NBFCs and mutual funds, according to a PwC India-FICCI report.
The report, titled 'Redefining the FinTech experience: Impact of COVID-19', said fintech can act as enablers for the banking and financial sector, playing a crucial role in ubiquity and adoption of digital financial services.
It suggested policy and regulation measures to support the fintech sector during the COVID-19 crisis. These include further promoting digital payments and digital banking.
"The GoI (Government of India) is advised to reinstate subsidies for digital payments for transactions below Rs 2,000 immediately. Additionally, it is suggested that it should announce status quo ante on merchant discount rate (MDR)," it said.
It also suggested that the Reserve Bank of India (RBI) should mandate launching of video KYC processes by all lenders at the earliest and simplify prescriptive requirements such as the presence of a bank officer on the other side during an interaction.
"The RBI should also encourage the development of collaborative solutions for video KYC between banks and fintech," the report said.
Calling for a Central KYC registry, the report suggested an explicit mandate from the RBI regarding it be issued and lenders be instructed to launch Central KYC at the earliest for paperless onboarding of customers.
"Banks, NBFCs (after securing an RBI mandate) and KYC registration agencies (KRAs) -- after securing a SEBI mandate -- should be able to upload data to the Central Registry of Securitization Asset Reconstruction and Security Interest (Cersai) CKYC database to enable its growth," it said.
To enable business continuity of fintech firms, non-banking financial companies (NBFCs), asset management companies, SEBI-registered investment advisors and reporting entities, the report said Aadhaar based e-KYC authentication should be implemented that will help digitally onboard customers without physical intervention.
It further suggested that payments will continue to emerge as one of the key pillars of fintech due to its potential to act as an infrastructure provider and offer a full suite of cash management services. Retail and MSME lending will emerge as two main components of alternative lending driven by their tech-driven approach, it said.
"Fintech sector in India, across start-ups and incumbents, needs to go beyond liquidity challenges. They need to tap opportunities arising from broader sectoral digitisation and changing consumption preferences to stay competitive and well positioned to capitalise as the economy revives," PwC India Partner and Leader (Fintech) Vivek Belgavi said.Follow our full coverage of the coronavirus pandemic here.