Fintech startups have been eagerly waiting for modifications to the KYC guidelines to make it easier to onboard customers, but the industry had sought more convenience for remote KYC mechanisms.
Digital payments and lending firms, which had built their on-boarding system on back of Aadhaar, are hoping to get back access
IRDAI said that with the regulatory sandbox approach, fintechs “will have a safe and conducive space to experiment... and where the consequences of failure can be contained.” It also said the sandbox will hope to boost growth in the fintech space.
A customer-centric approach to ensure prevention of fraud through digital channels puts the onus on banks and digital payments players to ensure stricter security checks and controls, according to the document.
The government has laid out a three-step process to be followed by non-banking companies to get clearance from regulators and govt agencies to access the UIDAI database
Nasscom said regulators in countries such as the UK permit such innovations in their regulatory sandbox, arguing that by including them the RBI could develop a better understanding of the risks.
The Fintech Convergence Council, which is part of the Internet and Mobile Association of India, has been working closely with the government and the regulators to find a solution to the regulatory challenges.
The industry is reaching out to the ministry to request them to account in all regulated entities within the purview of the amendment.
From crushing paperwork to mounting costs of regulatory compliance, the fast-moving sector is caught in a morass.
FCC will mainly look at bringing in increased cooperation between industry participants like banks, fintech startups, insurance companies, regulators and the government.
Aadhaar Authentication User Agencies and their sub-bodies are basically companies which have a direct connection to the UIDAI servers