To enable cross-border payments using the central bank digital currency (CBDC), Finance Minister Nirmala Sitharaman stated on Thursday (January 25) that the Reserve Bank and the government are actively working on enhancing it.
Nine banks were selected by RBI for the wholesale CBDC pilot project,i.e. State Bank of India, Bank of Baroda, Union Bank of India, HDFC Bank, ICICI Bank, Kotak Mahindra Bank, Yes Bank, IDFC Bank and HSBC.
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Additionally, on December 1, 2022, RBI launched a pilot program for the retail version of CBDC, or the e-rupee. The legal tender is represented by a digital token called the e-rupee.
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It is available in the same coin and paper money denominations. Banks, as financial middlemen, are used to spreading it. The partnering banks offer a digital wallet that allows users to transact with e-rupee.
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Sitharaman stated in a speech commemorating Hindu College’s 125 years of existence.
According to her, it facilitates faster payments at a lower cost and lowers both internal and external remittance costs.
“We strongly believe it helps in cross-border payments. It will bring in greater transparency and traceability….” Fintech news updates in India are right here.
She continued, “Both the regulator and the government are working on it. We are actively engaged in it”. Access the latest Fintech news right here.
When questioned about the key industries for creating “Viksit Bharat,” she stated that manufacturing and agriculture would be the main areas of concentration.
She opined, “Agriculture retains its primacy and we are looking at strengthening agriculture by modernizing some of the practices, post-harvest practices and so on,”
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She stated that the government had designated 13 sunrise industries in manufacturing, including space, earth sciences, semiconductors, renewable energy, and machine learning.
The fintech industry’s expectations for the 2024 budget
Expectations are high regarding certain favours being given to taxpayers and specific industries, even though India’s finance minister Nirmala Sitharaman has stated that the upcoming Budget, which is scheduled to be presented on February 1, is only a vote-on-account (approving the continuation of existing programmes) and not full-fledged.
BankBazaar.com has published a list of requests the fintech industry has made of the government in a report. While some of these requests may not be covered by the budget, they can be seen as a comprehensive list of what the fintech industry hopes to see in 2024.
Account aggregator (AA) framework To Be Expedited: Fintech news today in India.
The government introduced the AA framework in September 2021, which makes it possible for financial institutions like banks and insurance companies to securely share a person’s data following that person’s consent.
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The idea is that a person can electronically share their financial information with another financial institution rather than having to send paperwork to each one individually. The person must register with an AA, an organization under RBI regulation.
The BankBazaar.com paper discusses getting as many bank accounts as possible integrated into this framework and bringing all banks—public and private—on board the AA system.
Several banks, including City Union Bank, Dhanlaxmi Bank, RBL Bank, South Indian Bank, etc have not joined the AA league yet.
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It also discusses incorporating the Goods and Services Tax Identification Number, or GSTIN—a designation that in India identifies businesses that are registered for GST—into the AA framework.
Once that occurs, it will open the door for small enterprises and retail consumers to obtain loans from many lenders in a purely digital manner.
DigiLocker Swells With More Documents: Latest News on Fintech
Additional documents including the EPFO passbook, ePAN, and form 26 AS (statement showing tax credit) should be added to DigiLocker, according to a BankBazaar.com article. Customers will benefit from easy access to their papers and the ability to share them with financial institutions for prompt credit disbursement.
The Ministry of Electronics & IT introduced DigiLocker, a safe cloud-based platform for document exchange, archiving, and authentication. Using their mobile number or Aadhaar number, one can register for DigiLocker and then submit their papers.
Creating an even playing field for online and offline Lenders:
The RBI released its rules for digital lending in September 2022, in response to the unscrupulous activities of illicit digital lending apps.
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The guidelines place the burden of proof on banks and NBFCs to make sure that, among other things, grievance redressal officers are engaged, loan-related costs are disclosed upfront, and digital lending apps and platforms do not misuse customer data.
They also state that loan servicing occurs directly with the lender’s (regulated entity) account and not the digital lending app or platform.
According to BankBazaar.com research, online and offline lending should be treated equally.
This consumer-centric legislation that was put in place for the online lending sector must also be applied to the offline lending sector. According to the research, “the growth of the FinTech industry depends on the level playing field principle.”
Laws about the DPDP Act’s implementation: (Fintech news updates in India)
The Digital Personal Data Protection Act, 2023 (DPDP Act) mandates that anyone in possession of data take appropriate precautions, obtain consent before using the data, and even face severe fines if a data breach occurs.
According to the DPDP Act, a “consent manager” is any third-party organization that is registered with the Data Protection Board and that gives people the ability to grant, monitor, and revoke consent for the use of their data by “data fiduciaries,” such the government or a financial institution.
In this regard, the BankBazaar.com study demands that before the DPDP Act’s implementation, the consent manager’s “architecture”—or the procedures that a business must adhere to—be prepared.
“Organizations (that possess data) will have to redesign their consent-related procedures and technology for consent managers to integrate with them if that doesn’t happen,” the paper states.
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Equitable taxation of listed and unlisted equity: The rates of taxes vary for listed and unlisted equity.
Gains from the sale of listed equity shares held for longer than a year that exceed Rs 1 lakh annually are classified as long-term gains and are subject to a flat 10% tax.
Conversely, for unlisted shares, a 20 per cent long-term capital gains tax (with indexation advantage) is applicable for any holding period longer than 24 months.
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The research suggests that for long-term capital gains taxation, the government take into account treating unlisted equity on the same footing as listed equity. As a result, investors seeking to purchase equity in start-up and unlisted fintechs will find them more appealing.
Employee stock option plans, or ESOPs, offered to staff members of fintech companies will also profit from this kind of tax.
The research recommends that this benefit only be granted to businesses that meet specific capital and revenue standards and are registered with a regulator or self-regulatory entity to prevent misuse by fraudulent entities.
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