Lok Sabha Question No. 2850 (UNSTARRED), answered on 2021-12-15
Subject: Fintech Sector
Ministry: COMMERCE AND INDUSTRY
Asked by: Rebati Tripura, Anurag Sharma

## GOVERNMENT OF INDIA MINISTRY OF COMMERCE & INDUSTRY

## DEPARTMENT FOR PROMOTION OF INDUSTRY AND INTERNAL TRADE LOK SABHA

UNSTARRED QUESTION NO. 2850. TO BE ANSWERED ON WEDNESDAY, THE 15 TH  DECEMBER, 2021.

## FINTECH SECTOR

## 2850.  SHRI REBATI TRIPURA: SHRI ANURAG SHARMA:

Will the Minister of COMMERCE AND INDUSTRY be pleased to state: वाणिज्य  एवं उद्योग मंत्री

- (a) whether India is all set to become one of the largest digital markets in the world with its rapid expansion of mobile and internet networks and if so, the details thereof;
- (b) whether India has a huge potential in Fintech sector in the country and if so, the details thereof;
- (c) whether there has been increase in the investment inflow in the Fintech sector during the last three years and if so, the details thereof and the steps taken by the Government to increase the inflow; and
- (d) the  other  steps  taken  by  the  Government  to  encourage  industry  and entrepreneurs to use local talent to produce globally marketable solutions?

## ANSWER

## वाणिज्य एवं उद्योग मंत्रालय में राज्य मंत्री ( श्री सोम प्रकाश ) THE MINISTER OF STATE IN THE MINISTRY OF COMMERCE & INDUSTRY (SHRI SOM PARKASH)

- (a) & (b): With Fintech adoption rate at 87% against the global average of 64%, India has emerged as one of the largest digital markets in the world. Fintech Sector has huge potential in India,  supported by an enabling policy and digital infrastructure framework.

As per industry estimate, India has over 676 million smartphone users, over 1.2 billion telecom subscribers (wireless + wireline) and 825 million internet  subscribers  of  which  approximately  39%  belong  to  the  rural areas (as on March 2021).

Further, total number of transactions related to  digital payments, a key enabler for expansion of digital markets, has increased from 2,071 crore in FY 2017-18 to 5,554 crore in FY 2020-21. As on date, more than 5179 crore transactions have been reported in the current financial year.

Furthermore, India  now  hosts  the  3rd  largest  ecosystem  for  startups globally;  59,593  startups  have  been  recognized  by  DPIIT  across  57 unique industries, of which 1,860 startups belong to the FinTech sector. As of December 2021, India has over 17 Fintech companies, which have gained 'Unicorn Status' with a valuation of over USD 1 billion.

- (c): As regards to investment inflow in the Fintech sector, no such data is maintained centrally .

Government has taken several measures to increase investment inflows in Fintech sector.The Pradhan Mantri Jan Dhan Yojana (PMJDY) has been targeted at increasing financial inclusion in India by helping in new bank account enrollment of beneficiaries for direct benefits transfer and accessibility to a host of financial services applications. This has enabled Fintech  startups  to  build  technology  products  to  penetrate  the  large consumer base in India.

Aadhar, the unique biometric identification system, allows the public to access  government  digital  services  thereby  improving  the  availability and transparency for social payments including financial assistance to those in need.

Unified  Payments  Interface  is  single  platform  that  merges  various banking services and features under one umbrella and has been built as a scalable payments platform supporting digital payments in India.

Jan  Dhan  Yojana,  Adhar  and  Mobile  (JAM  trinity)  alongwith  Unified Payments Interface have been instrumental in bringing in transparency, integrity  and  timely  delivery  of  financial  benefits  and  services  to  the public.

Key initiatives undertaken by the Government for the Fintech ecosystem in India are listed in Annexure - I .

- (d): Government has been making continuous effort to promote strong and sustainable  industrial  development  in  the  country.  Some  of  the  key measures undertaken are at Annexure-II.

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## ANNEXURE REFERRED TO IN REPLY TO  PART (c) OF THE LOK SABHA UNSTARRED QUESTION NO. 2850 FOR ANSWER ON 15.12.2021.

## Key Initiatives undertaken by the Government for the Fintech Ecosystem in India

- a. Jan Dhan Yojana has been targeted at increasing financial inclusion in India by helping in new bank account enrollment of beneficiaries for direct benefits transfer and accessibility to a host of financial services applications. This has enabled Fintech startups to build technology products to penetrate the large consumer base in India
- b. India Stack is a societal initiative aimed at building public digital infrastructure to promote public and private digital initiatives including accelerated adoption of technology in finance
- c. Aadhar ,  the  unique  biometric  identification  system,  has  allowed  Aadhar Enabled Payment System and Aadhar Payment Bridge System:
4.  Aadhar  Enabled  Payment  System allows  individuals  to  conduct  financial transactions on a Micro-ATM by furnishing their Aadhaar number and verifying it with the help of their fingerprint/iris scan
5.  Aadhar  Payment  Bridge  System allows ease in bulk and recurring Government  benefits  and  subsidy  payments,  facilitating  operations  from Aadhaar-linked bank accounts, using the biometric authentication
- d.  Development  and  roll-out  of  authentication  solutions  including digital  KYC, video-based  customer  identification  process,  and  digital  signature  on documents has  created  various  safeguards  and  a  hassle-free  system  for Fintech startups and customers to leverage the technology-enabled solutions in the sector
7.  A central repository, Central KYC , has been developed for reducing the hassle of undergoing multiple KYCs for different financial institutions. This allows the KYC process of consumers to be conducted only once unless there are any changes in consumer details
8.  KYC  and  customer  on  boarding  costs have  been  reduced  significantly enabling  expansion  of  financial  services  to  rural  India  and  opening  their accounts
- e. Unified Payments Interface has been built as a scalable payments platform supporting digital payments in India
- f. License for Payments Banks has further helped in enhancing the financial inclusion drive in the country by allowing the setting-up of payments banks and expanding the access to payments/remittance services. In a bid to promote digital payments banks in the country, RBI has announced an increase to the maximum end of day balance for payment banks to Rs. 2 lakh
- g. National Automated Clearing House System has been successfully used for making bulk transactions
- h. Bharat Bill Payment System has helped in enhancing consumer convenience to  pay  bills  across  utilities  and  other  segments  and  has  been  expanded  to include  all  categories  of  billers  who  raise  recurring  bills  (except  prepaid recharges) as eligible participants, voluntarily
- i. RBI  has  also  developed  a Payments  Infrastructure  Development  Fund (PIDF) scheme to subsidise deployment of payment acceptance infrastructure in tier-3 to tier-6 centres j. The  RBI  has  created  a  regulatory  framework  around  Peer-to-Peer  (P2P) lending by recognising P2P lenders as Non-Banking Financial Companies (NBFCs) , thus providing alternative credit access to the unbanked k. IRDAI has  undertaken  various  initiatives  towards boosting  the  insurance penetration ,  such  as  permitting  insurers  to  conduct  video-based  KYC, launching  standardized  insurance  products  and  allowing  insurers  to  offer rewards for low-risk behaviour  Government institutions such as the Health ministry and the NITI Aayog are also supporting the transformation in the insurance industry through the National  Digital  Health  Mission  (NDHM),  the  Digital  Information  Security  in Healthcare Act (DISHA) and the National Health Stack
- l. A world-class Fintech hub has been developed at the International Financial Services  Centre  (IFSC), GIFT  City in Gandhinagar,  Gujarat  to  further strengthen the vision of making India a global Fintech hub

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## ANNEXURE REFERRED TO IN REPLY TO  PART (d) OF THE LOK SABHA UNSTARRED QUESTION NO. 2850 FOR ANSWER ON 15.12.2021.

## Measures undertaken by the government to boost industrial development in the country

- i. Startup India initiative was launched on 16 th  January, 2016 to build a strong eco-system for nurturing innovation and startups in the country that will drive sustainable economic growth and generate large scale employment opportunities. As on 26 th  November, 2021, more than 59000 startups have been recognized by DPIIT. The recognised startups have reported over 6.2 lakhs job created. To incentivize Startups, Fund of Funds for Startups Scheme (FFS), and Startup India Seed Fund Scheme (SISFS) schemes are being implemented by the DPIIT.
- ii. Government  has  put  in  place  a  liberal  and  transparent  policy  for  attracting Foreign Direct Investment (FDI), wherein most of the sectors are open to FDI under the automatic route. Government reviews FDI policy on an ongoing basis and changes are made in the FDI policy regime, from time to time, to ensure that  India  remains  increasingly  attractive  and  investor-friendly  investment destination. Measures taken by the Government on FDI Policy reforms have resulted in increased FDI inflows in the country, which year after year is setting up new records. India registered its  highest  ever  annual  FDI  inflow  of  USD 81.97 billion (provisional figures) in the financial year 2020-21. These trends in India's  FDI  are  an  endorsement  of  its  status  as  a  preferred  investment destination amongst global investors.
- iii. Government  is  working  to reduce  compliance burden  in  order  to  spur investment in India. Government is also working to reduce compliance burden on citizen and business and the aim of this exercise is to simplify, decriminalize & remove redundant laws. In order to monitor large database of compliances across  Central  Ministries/Departments  and  States/UTs,  Government  has launched the Regulatory Compliance Portal on 1st January, 2021 (https://eodbrcp.dpiit.gov.in/). Based on data uploaded on Regulatory Compliance  Portal,  more  than  25,000  compliances  have  been  reduced  by Central Ministries/Departments and States/UTs combined.
- iv. The Reserve Bank of India has come up with Regulatory Sandbox (RS) with the  objective  to  foster  responsible  innovation  in  financial  services,  promote efficiency and bringing benefit to consumers. The RS allows the regulator, the innovators,  the  financial  service  providers  (as  potential  deployers  of  the technology) and the customers (as final users) to conduct field tests to collect evidence on the benefits and risks of new financial innovations, while carefully monitoring and containing their risks. The RS is an important tool which enables more dynamic, evidence-based regulatory environments which learn from, and evolve with, emerging technologies.
- v. The RBI has also created a Reserve Bank Innovation Hub (RBIH). The aim of  Innovation  Hub  is  to  promote  innovation  across  the  financial  sector  by leveraging on technology and creating an environment which would facilitate and  foster innovation, in collaboration with financial sector institutions, technology industry and academic institutions.
- vi. Production-Linked  Incentive  (PLI)  Scheme for  14  key  sectors  (including Drones and Drone Components): Government has announced PLI scheme to enhance India's manufacturing  capabilities  and  exports.  The  schemes  have been specifically designed to attract investments in sectors of core competency and cutting-edge technology; ensure efficiency and bring economies of size and scale  in  the  manufacturing  sector  and  make  Indian  manufacturers  globally competitive  so  that  they  can  integrate  with  global  value  chains.  The  PLI schemes are being implemented by the concerned Ministries/ Departments. There are targeted promotion activities being taken up by concerned Ministries/ Departments for identification of potential global and domestic investors by way of organizing investor networking events, investor roundtables, seminars and one-on-one meetings with potential investors.
- vii. PM Gati Shaki launched on 13th October, 2021: It is a National Master Plan for  multi-modal  connectivity.  Gati  Shakti-  a  digital  platform  -  to  bring  16 Ministries including Railways and Roadways together for integrated planning and coordinated implementation of infrastructure connectivity projects.
- viii. Industrial Information System (IIS) -  Government has developed an India Industrial Land Bank (earlier known as Industrial Information System) which provides a GIS-enabled database of industrial areas including clusters, parks, nodes, zones, etc. across the country to help investors identify their preferred location  for  investment.  4507  industrial  parks/estates/SEZs  in  5.15  lakh hectares have been mapped on India Industrial Land Bank (IILB) along with net land area availability.
- ix. Creating  world  class  infrastructure  through  developing  nodes  across various Industrial Corridors . Industrial Corridor Programme  is being developed in 04 phases (with 32 nodes) as part of the National Master Plan for providing  multimodal  connectivity  infrastructure  for  creation  of  greenfield industrial smart cities with plug and play infrastructure in order to make India a manufacturing hub.

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