FinTechRevamping India’s Finance: RBI’s PRAVAAH, Retail Direct App, and FinTech/EmTech Repositories

INTRODUCTION

The Reserve Bank of India (hereinafter referred to as “RBI”) has launched three transformative initiatives: the Platform for Regulatory Application, Validation, and Authorization (hereinafter referred to as “PRAVAAH”) portal, a comprehensive FinTech Repository, and the Retail Direct Mobile App on May 28, 2024. These initiatives were introduced following the commitments outlined in the RBI’s earlier statement on Development and Regulatory Policies. Each of these measures are designed to enhance the efficiency, transparency, and accessibility of the financial sector in India.

In this blog, we will explore the key implications and potential impact of these ground-breaking developments. We will delve into how the PRAVAAH portal streamlines regulatory processes, the role of the FinTech Repository in consolidating crucial information, and the benefits of the Retail Direct Mobile App for individual investors. Together, these initiatives mark a significant step forward in the RBI’s efforts to foster innovation and improve the regulatory framework within the Indian financial system.

PRAVAAH – MAKING REGULATORY APPROVALS SIMPLER

PRAVAAH is a robust, unified online portal designed to make it easier for any person or organisation to apply for a licence, authorization, or regulatory approval from the RBI. Currently, PRAVAAH offers 60 application forms across various RBI regulatory and supervisory departments, with plans to expand this number. The portal is accessible at the PRAVAAH Portal.

Background and Development of PRAVAAH

The RBI started building this web-based platform in 2023 in an effort to expedite the approval procedures for permits, licences, and other regulatory clearances. This project is in line with the Government of India’s Union Budget for 2023–2024, which placed a strong emphasis on cutting costs for financial industry regulators and streamlining compliance processes. These procedures used to be carried out in person, which caused applicants to experience delays and uncertainty. By offering an online platform for people and organisations to apply for regulatory authorizations, licences, or approvals, the PRAVAAH portal solves these problems.

Applications can be filed through PRAVAAH for a range of approvals, such as those needed to function as a payment aggregator, begin banking operations, establish foreign banks in India, alter the ownership structures of non-banking financial companies, and manage real estate acquisitions and sales.

Step-by-Step Guide for Submitting a Regulatory Application

The following procedure must be followed by the applicant in order to submit a regulatory application:

1. Registering on the Portal: In order to get an OTP for registration, the applicants must give information about themselves, including name, designation, GST number, PAN number, address, and mobile number. The applicant registers on the site after being validated.
2. Application Submission: Before submitting their application, candidates choose the appropriate department and category. Emails and SMS are used to send updates, and an online status check is available. It may be helpful to additionally file a physical copy with the relevant RBI department, even if it is not specifically necessary.
3. Tracking and Monitoring: Users can monitor the progress and status of their applications in real time.
4. Answer Questions: Using the platform, applicants can upload answers to any questions the RBI may have posed.
5. Receive Decision: The RBI notifies the applicant via email and SMS after processing the application.

Analysis

It is anticipated that the PRAVAAH portal would make the approval and application procedures more straightforward and efficient. It will enable applicants to submit requests online and monitor their status in real time. It is projected that this invention will shorten processing times and do away with the uncertainty that comes with physical filings. Furthermore, by offering updates and enabling applicants to reply to RBI inquiries, the platform improves transparency. All things considered, PRAVAAH is a big step towards improving the usability and accessibility of regulatory compliance for organisations subject to RBI regulation. To guarantee that their regulatory submissions are processed efficiently, applicants must be informed of the procedural requirements for utilising the site.

MOBILE APPLICATION FOR RBI RETAIL DIRECT PORTAL – ENHANCING ACCESSIBILITY FOR INDIVIDUAL INVESTORS

In 2021, RBI launched the RBI Retail Direct Scheme to simplify the process for individual investors to invest in Government Securities (hereinafter referred to as “G-Secs”). Through this scheme, retail investors could open a Retail Direct Gilt (hereinafter referred to as “RDG”) Account via the RBI Retail Direct online portal.  This scheme simplifies the buying and selling of G-Secs in both primary and secondary markets.

To further enhance accessibility, the RBI has now introduced a mobile application for the Retail Direct portal. The Retail Direct Mobile App allows retail investors to transact in G-Secs directly from their smartphones.

How to Utilise the Mobile App for RBI Retail Direct

1. Create an Account: To open a RDG account with the RBI, launch the app and provide the required information, including your complete name, PAN, mobile number, email address, and residential address.
2. Make use of the platform: To start trading G-Secs, log in to the app and select the ‘main market’ option from the dashboard.
3. Make Offers: From the ‘auction watch’ area, choose a G-Secs to bid on, then fill in the ‘bid entry’ window with your bid amount.
4. Fund Your Bids: You can use payment options like UPI and Net Banking to fund your bids either at the time of bidding or prior to the bidding/subscription window closing.

Analysis

It is anticipated that the release of this mobile application would significantly affect individual G-Secs investors. The app will make it simpler to access and manage RDG accounts, giving retail investors more flexibility and convenience when making G-Secs investments. This improvement is expected to increase the number of people who can take advantage of the stability and security of these assets, which will increase scheme participation and advance financial inclusion.

FINTECH REPOSITORY – COMPREHENSIVE DATA FOR TECHNOLOGICAL ADVANCEMENTS

The FinTech Repository was established by the RBI to offer vital details regarding FinTech companies, their operations, and the technologies they employ. Contributions to the FinTech Repository are welcome from both regulated and unregulated FinTech businesses.

Alongside this, the RBI has introduced the EmTech Repository, specifically for RBI-regulated entities such as banks and non-banking financial companies (hereinafter referred to as “NBFCs”). This repository focuses on their adoption of emerging technologies like Artificial Intelligence, Machine Learning, Cloud Computing, Distributed Ledger Technology, and Quantum Computing.

Both the FinTech and EmTech Repositories are secure online platforms managed by the Reserve Bank Innovation Hub (hereinafter referred to as “RBIH”), a subsidiary of the RBI. These repositories aim to provide comprehensive sectoral data, trends, and analytics, benefiting both policymakers and industry participants. The RBI encourages FinTech entities and regulated institutions to actively contribute to these repositories, ensuring the availability of valuable data and insights.

Objectives of the FinTech Repository

• Data Collection: A wealth of information on a range of FinTech activities, such as the application of cutting-edge technologies and creative business models, will be gathered by the FinTech Repository. By gathering comprehensive data, the RBI will be able to keep up with the quickly changing business and make sure that laws are up to date with the most recent advancements and trends.
• Formulation of Policy: The RBI will be able to create more knowledgeable and practical policies if it has access to up-to-date, comprehensive information. These laws are crucial for overseeing and assisting the FinTech sector and creating an atmosphere that allows companies to grow while preserving financial stability.
• Risk management: Potential hazards and weaknesses within the FinTech sector might be identified with a thorough understanding of the industry. Businesses and consumers will both gain from proactive risk management as it contributes to the development of a more secure and safe financial environment.
• Encouragement of Innovation: The initiative’s goal is to establish a balanced environment that, while maintaining consumer safety and financial stability, encourages innovation.

Scope of the Repository

The repository have the following items:

• Regulated Entities: Conventional financial institutions already overseen by the RBI, such as banks and NBFCs.
• Unregulated Entities: FinTech startups and other businesses that might not be subject to direct regulatory supervision at the moment.

Analysis

The introduction of the FinTech Repository by the RBI is intended to promote best practices and provide timely information to regulators and stakeholders. This repository will capture data on the use of technologies. By creating these repositories, the RBI aims to compile comprehensive data on these entities, enabling the availability of sector-wide data, trends, and analytics. This information will offer valuable insights into the adoption of emerging technologies and help regulators understand the associated risks and opportunities. Consequently, it will aid in developing appropriate regulatory frameworks to manage these technologies effectively.

AMLEGALS REMARKS

Moving forward, fostering innovation and enhancing financial inclusivity are pivotal goals that the RBI aims to achieve through its transformative initiatives. By continually refining the PRAVAAH portal, expanding the capabilities of the Retail Direct Mobile App, and enriching the FinTech or EmTech Repositories with comprehensive data and insights, the RBI seeks to strengthen India’s financial landscape.

These efforts are crucial for adapting to technological advancements, promoting regulatory efficiency, and ensuring a secure and accessible financial environment that benefits all stakeholders in the Indian economy.

– Team AMLEGALS assisted by Ms. Shraddha Jain (Intern)