Govt Very Much With Startups, Fintechs: FM Sitharaman
Finance Minister Nirmala Sitharaman on Wednesday assured the startup community of the central government's unwavering support amidst regulatory scrutiny faced by some of the country's leading startups in recent times.
Addressing concerns raised by startups, particularly in the Fintech sector, during a media event in Bengaluru, Sitharaman stressed the importance of regular support and clarifications from regulators to facilitate innovation without being bogged down by governance and compliance issues.
Sitharaman revealed that she had a meeting with combined representatives of many startups a “couple of days ago” to understand the concerns after they wrote a letter to the FM. She acknowledged the anxieties expressed by startups during a recent interaction and said, “I’ve had an interaction with startups, particularly the Fintech ones, to understand with what anxiety they wrote that letter to me. It was a fantastic conversation.”
She said that there was a need for startups to have dedicated support teams for compliance matters, ensuring that innovation efforts remain unhindered.
“I was very glad they voiced the concerns and they may indirectly come out of what is happening. But the regulators were all there with me and they have really understood and they've connected with them,” Sitharaman remarked.
“Let me be upfront and say the concerns were not emanating from Paytm’s issues. It was more on regular support that they may need from the regulators, clarifications, which are periodically required, because their core business is not governance and compliance related issues,” she added.
It is believed that this meeting had happened in the wake of the RBI’s action against Paytm Payments Bank, which has heightened attention on regulatory compliance within the fintech startups in India. The meeting saw representatives from various prominent entities in both the private and public sectors in attendance. Among those representing the private sector were individuals from notable companies such as Policybazaar, MakeMyTrip, Razorpay, PhonePe, Google Pay, Amazon Pay, CRED and venture capital firm PeakXV. Additionally, key figures from the public sector, including SBI Chairman Dinesh Khara and officials from NPCI, Canara Bank and Bank of Baroda, were reportedly also present.
During the Bengaluru event, the Finance Minister said she had proposed practical solutions to address startup concerns, suggesting monthly virtual conferences with regulators like the Reserve Bank of India (RBI). Sitharaman said, “I did tell the RBI that once in a month on a dedicated day, they should do a virtual conference with startups, particularly Fintechs, so that they can answer questions and after that put that as a FAQ, so that others who did not attend, can (still) benefit from it.”
Sitharaman reassured startups that the government stands firmly behind them and said, “The government is very much with these startups. We want you to be assured that you will be given all assistance."
She ended by stressing on the need to simplify compliances and provide necessary assistance to ensure a conducive environment for startups to thrive.
Earlier on Wednesday, The Reserve Bank of India (RBI) introduced an elaborate framework for a 'regulatory sandbox,' aimed at creating a secure environment for emerging fintech startups to experiment with their product ideas before launching them in the market.
In a statement issued by RBI, the central bank said that a sandbox setup will enable regulatory authorities to collaborate with startups and formulate regulations that foster innovation, thereby facilitating the provision of cost-effective financial products. The oversight of this sandbox initiative will be under the purview of the fintech division within the RBI.
