Fintech companies prioritize lending standards, KYC simplicity, and compliance

In a meeting with Finance Minister Nirmala Sitharaman on Monday, more than forty fintech companies—among them Razorpay and PhonePe—started a number of conversations on reforming lending laws and streamlining and digitizing KYC, among other things.

They said that by facilitating the free flow of ideas, this effort would help the industry thrive. Speaking about the steps that fintech companies need to take to make sure they are in compliance with consumer protection laws and guidelines that the RBI has issued, Teamlease RegTech CEO and co-founder Rishi Agrawal stated that in order for businesses to stay on top of their compliance obligations, they need to stay informed about the regulatory requirements.

“They have to be up to date with the RBI’s Master Directions and Circulars. Businesses may remain compliant with regulations by evaluating the effects of the RBI’s instructions. To monitor deposits, lending, recovery, and other company activities, they must digitize internal procedures. To establish employee behavior guidelines, these IT systems need to be encoded. These algorithms need to raise red signals when workers behave differently than anticipated, he added.

He went on to say that risk flagging prevents illicit and dangerous transactions from being approved without top management approval. Stronger, risk-based lending procedures are required inside systems to discourage employees who breach the rules. Any fintech that takes deposits and extends loans must have the relevant RBI banking or non-banking license.

The discussion with the FM focused on compliance even though no particular example, such as Paytm Payments Bank, was discussed. To ascertain the degree to which rules apply to their company, companies are required to undertake compliance applicability evaluations. In order to be informed about regulatory changes, they need to stay on top of the circulars, instructions, advisories, notifications, and directives that regulators like the RBI and the Ministry of Corporate Affairs issue. Agrawal said.

The efficiency and accuracy of KYC procedures are improved, according to Bhuvan Rustagi, co-founder and COO of Per Annum and Lendbox, by using cutting-edge technology for real-time document verification.