First fintech SRO aims to achieve majority membership across sectors
Mumbai, Nov 26, 2024
One of the major focus areas for the SRO-FT includes improving communication among members regarding compliance and regulation
The Fintech Association for Consumer Empowerment (FACE), the only self-regulatory organisation for fintechs (SRO-FT), is targeting membership from at least 75 per cent of players in all key fintech categories within the next three years, according to a senior executive.
The total number of members at the organisation has increased to 110 participants, up from around 60 when it received a nod from the Reserve Bank of India (RBI) to operate as an SRO-FT in August.
“More than one-third of our members are now beyond just the lending category. The agenda is that we want to be representative across different categories of fintech. For instance, in lending tech, there are 300 companies; we want to have 75 per cent of them as members in three years,” said Sugandh Saxena, chief executive officer (CEO), FACE, in an interaction with Business Standard.
The organisation, which originally provided memberships to fintechs in the lending space, has expanded the scope of participation to include players in associated domains such as account aggregator non-banking financial companies (AA-NBFCs), regulatory technology (regtech) firms, and peer-to-peer (P2P) NBFCs, among others.
An SRO is a non-governmental organisation that acts as a bridge between industry players and the regulator. It also sets standards for the conduct of entities operating in the country.
“From an SRO-FT perspective, the overall idea is that we could unite the non-regulated entities. There would be some fintechs that are regulated, like AA-NBFCs and P2P-NBFCs. However, as an SRO-FT, we have to ensure that the majority of our members are non-regulated fintechs,” she added.
She said the organisation plans to establish three working committees by the end of the next quarter to focus on different operational elements of the SRO-FT.
“To operationalise the SRO-FT framework with sound governance and an ecosystem perspective, we propose to have three core empowered committees. One is the standards committee, which will publish standards and guidelines for members. The second will focus on oversight and enforcement mechanisms. The third will look at dispute resolution and redressal,” she explained.
One of the major focus areas for the SRO-FT includes improving communication among members regarding compliance and regulation.
“As an SRO-FT, it is our duty to convey the right information and message to our members in line with regulatory objectives. The key is ecosystem engagement, winning members' trust, and improving market conduct in line with compliance and regulatory requirements,” she added.
The need to streamline the fintech sector in India assumes importance as the country has about 10,244 fintech entities, according to data from the Ministry of Finance.
However, Saxena explained the need to monitor how many of the entities are active and operational since most identification of fintechs relied on self-classification.
“It is an ongoing task to really understand how many of them are actually active. It is part of our work, which will happen over a period of time,” she added.
Earlier this year, the banking regulator issued a final framework for recognising SRO-FTs, encouraging entities to have representative membership from the fintech sector.
The RBI indicated that there may be more than one SRO-FT, and fintech firms would be encouraged to participate in at least one.
[The Business Standard]
