Govt & RBI Strengthen Fintech Ecosystem with Enhanced Regulatory Framework & Consumer Protection
UPSC / SSC current affairs note · Economy
Why in news
The government and RBI have reviewed fintech issues including digital lending and payment aggregators, leading to several regulatory interventions. These measures aim to strengthen cybersecurity, consumer protection, and fraud detection in the fintech ecosystem.
Background
The fintech sector in India has grown rapidly, raising concerns about data privacy, cyber fraud, and unregulated digital lending. The government and RBI have been continuously engaging with stakeholders to address these issues through regulatory frameworks and consumer protection measures.
Key facts
RBI issued the 'Framework for Self-Regulatory Organisation(s) in the Fintech Sector' (SRO-FT Framework) on 30.05.2024 to establish regulatory standards, promote ethical conduct, ensure market integrity, resolve disputes, and foster transparency.
RBI issued Master Directions on Digital Payment Security Controls in February 2021 mandating uniform minimum security standards for banks across payment channels like internet, mobile banking, and card payments.
NPCI provides AI/ML-based fraud monitoring solutions for UPI transactions, issuing alerts and rejecting suspicious transactions.
MeitY notified the Digital Personal Data Protection Act, 2023 (DPDP Act) and DPDP Rules 2025 to protect personal data of individuals.
RBI introduced a framework for Regulatory Sandbox in August 2019 to test innovative financial products/services in a controlled environment with or without regulatory relaxations.
MHA launched the National Cyber Crime Reporting Portal (www.cybercrime.gov.in) and helpline number '1930' for citizens to report cyber incidents including illegal loan apps.
Banks facilitate complaints against illegal deposit/collection entities through the 'SACHET' portal and State Level Coordination Committee (SLCC).
RBI and banks conduct awareness campaigns on cybercrime prevention via SMS, radio, and promotions, and organize the eBAAT (electronic Banking Awareness and Training) program focusing on fraud and risk mitigation.
Prelims pointers
- RBI's SRO-FT Framework (May 2024)
- Master Directions on Digital Payment Security Controls (Feb 2021)
- Digital Personal Data Protection Act, 2023 (DPDP Act)
- National Cyber Crime Reporting Portal (cybercrime.gov.in)
- Helpline number 1930 for cybercrime
- SACHET portal for illegal deposit complaints
- eBAAT program by RBI
- Regulatory Sandbox framework (Aug 2019)
Mains angles
- GS3: Role of fintech in financial inclusion and associated regulatory challenges
- GS3: Cybersecurity and data protection in digital payments
- GS2: Government policies and interventions for consumer protection in digital economy
- GS3: Self-regulatory organizations and their effectiveness in fintech sector