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Govt forms Inter-ministerial committee to strengthen fintech ecosystem

EntrackrEntrackr · 10m ago
Govt forms Inter-ministerial committee to strengthen fintech ecosystem
Medial

The Government of India has constituted an Inter-Ministerial-Industry Committee on Fintech (IMICF) to address key issues in the fintech sector and recommend measures to enhance its ecosystem, according to a government order reviewed by Entrackr. The decision has been taken with the approval of the Hon’ble Finance Minister. The newly formed committee will be chaired by the Secretary, Department of Financial Services (DFS) and will include representatives from the Ministry of Electronics & Information Technology (MeitY), Department for Promotion of Industry and Internal Trade (DPIIT), Department of Economic Affairs (DEA), NITI Aayog, Reserve Bank of India (RBI), and Securities Exchange Board of India (SEBI). Additionally, industry experts such as Ajay Kaushal (Bill Desk), Jitendra Gupta (Jupiter), Varun Dua (Acko General Insurance), Lalit Keshre (Groww), Vishnu Pillai (KPMG), and Ashish Garg (McKinsey) will also be part of the committee. The newly constituted committee has been tasked with assessing the growth of the fintech sector and its contribution to the broader Banking, Financial Services, and Insurance (BFSI) industry. It will examine challenges faced by fintech companies, review existing policies and regulations, and analyze global best practices in fintech governance. Based on these insights, the committee will develop a long-term vision strategy and propose recommendations to enhance the fintech ecosystem in India. The committee is expected to submit its report within three months from the date of its first meeting. The CS&FT section of the Department of Financial Services (DFS) will act as the secretariat for the committee.

Exclusive: Major shift in UPI as Govt may allow MDR for large merchants

EntrackrEntrackr · 8m ago
Exclusive: Major shift in UPI as Govt may allow MDR for large merchants
Medial

Exclusive: Major shift in UPI as Govt may allow MDR for large merchants As of now, the government provides 15 basis points (bps) of subsidy for UPI transactions below Rs 2,000. One basis point is one-hundredth of a percentage point. Banks may soon find a monetization opportunity in Unified Payments Interface (UPI) transactions, with the Finance Ministry (FM) and the Reserve Bank of India (RBI) likely to permit Merchant Discount Rate (MDR) collection only from large merchants. According to three sources familiar with the matter, the move is under active consideration and targets businesses handling high volumes of UPI payments. "Large merchants such as Amazon, Dream11, Swiggy, Zomato, and Zepto may soon start paying MDR to banks," said one of the sources requesting anonymity. "The Finance Ministry and the RBI are likely to define a threshold such as daily UPI transaction volume/value for MDR applicability on high-UPI transacting merchants," the source added. MDR on UPI refers to the fee that banks charge merchants for processing UPI-based payment transactions. “The new MDR slab comes with a condition that large merchants will not be allowed to pass on MDR to consumers, they must bear it as a cost of doing business,” said the person quoted above. According to sources, the discussion on applying MDR on UPI transactions has been ongoing since the last quarter of FY25. The potential move comes in response to growing concerns from banks and payment aggregators around the sustainability of UPI infrastructure, which currently operates without any revenue model and inadequate subsidy. “Banks are already bearing losses on UPI. Ongoing costs like server upgrades, tech investments, and compliance add up. Without MDR from large merchants, sustaining UPI’s growth will be difficult,” said one of the senior banking executives of a leading private bank requesting anonymity. Last year, the Payments Council of India (PCI) proposed that large merchants, already paying 2% MDR on cards, should also pay 25 bps for UPI, as subsidies aren’t needed given UPI’s popularity and lower cost. In March, PCI wrote to PM Modi highlighting that the government’s Rs 1,500 crore subsidy covers only a small part of the Rs 10,000 crore needed annually to sustain UPI. Ongoing investment in innovation, cybersecurity, compliance, and infra justifies the 25 bps MDR for large merchants. Banks used to charge 30 bps on UPI transactions before it was waived off completely by the FM in 2020. Sources say the government will likely allow banks to charge MDR on large merchants soon, but no exact timeline has been set. Queries sent to RBI and the Finance Ministry received no response. As per sources, the policy is still at a deliberation stage, and no final decision has been made by the Finance Ministry or RBI. Policy decisions may change or evolve before formal notification. Despite soaring UPI volumes, the current revenue model is unsustainable, causing strain on banks, Payment Aggregators, and Payment System Providers (PSPs). Introducing MDR could provide crucial support to banks and enable a revenue-sharing model that benefits PAs, PGs, and PSPs.

Govt needs to boost financial support to startups: Snapdeal founder

Economic TimesEconomic Times · 1y ago
Govt needs to boost financial support to startups: Snapdeal founder
Medial

The government needs to increase financial support for the startup ecosystem in order to create a pool of domestic capital for new age businesses, according to Kunal Bahl, cofounder of Titan Capital and founder of Snapdeal. The government's Fund of Funds has invested in 140 domestic funds, but Bahl believes that the allocated amount of $1.2 billion over 10 years is too small for a nation of India's ambition and size. He suggests that the government should provide Rs 5,000 or Rs 10,000 crore annually to fuel the ecosystem. This conversation about boosting capital comes at a time when the startup ecosystem is experiencing a slowdown, with a majority of ownership in startups beyond Series C belonging to overseas funds. The government is reportedly working on a framework to reduce investment risks for local pension funds and insurers in the startup sector.

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