Fintech committee recommends to develop marketplace model for P2P lending

Emphasising more significant role of fintech on increasing access to finance, a fintech committee, in its final report to the Finance Ministry, has recommended the formation of a peer-to-peer(P2P) marketplace lending model.

The committee suggested to reform the current operational P2P lending model and develop a marketplace model of debt financing in the country.

“Potential hindrance in terms of restrictions on overall and individual exposure limits may be reviewed, and options like allowing Mudra Bank to directly fund or co-fund SMEs and MSMEs through P2P platforms may also be examined as an alternative credit delivery channel,” said the report.

Among many other suggestions, the panel talked of encouraging the entry of fintech firms dealing in fintech fraud control, push virtual banking and use of blockchain, artificial intelligence for credit drones for crop insurance.

It also suggested creating a level playing field between banks and non-banks to expand digital payments. It further recommended building National Digital Land Records Mission to make available land ownership data online to financial institutions and drone usage in making assessments for crop insurance firms.

The committee asked the government and RBI to take steps to eliminate discrimination in access to payments infrastructure to non-banks.

The committee, whose members include senior RBI and SEBI officials, was first constituted former FM Arun Jaitley. Then FM had put the high-level panel under the leadership of secretary in the Department of Economic Affairs (DEA).

To implement the suggestion of the report, after getting approval, an Inter-Ministerial Steering Committee will be set up on fintech applications in DEA, Ministry of Finance.