Approaches to Assessing Household Income for Microfinance Clients
The rise and regulation of fintech have been top of mind for regulators. Despite the ecosystem’s fervent preoccupation with fintech, little is known about the kind of fintech activities that exist in India or how they are regulated, currently. Beni Chugh [1] of Dvara Research attempts to bridge this gap through her latest working paper titled, ‘Financial Regulation of Consumer-facing Fintech in India: Status Quo and Emerging Concerns’.This paper builds on a long line of research resulting from a close observation of the developments in the space of consumer-facing fintech in India.
Regulators and even the government have off-late been invested in understanding the landscape of fintech activities and devising an appropriate response to its attendant risks and opportunities. However, organised academic studies dedicated to understanding the nature and expanse of fintech activities in India and how they are being regulated currently, appear to be in short supply. This paper attempts to address this gap in the literature.
This paper seeks to answer the question, how is fintech regulated in India? To answer the question, the paper identifies fourteen types of consumer-facing fintech activities currently prevalent in India. Together these fourteen types of activities constitute a typology of consumer-facing fintech activities in India. The paper further examines and compares the extent of financial regulation applicable to each activity in the typology. A simple index of regulatory oversight is used to rank each fintech activity according to the financial regulation they attract. These rankings are summarised in a schematic to create the regulatory landscape of consumer-facing fintech activities in India.
This regulatory landscape represents the status-quo of financial regulation applicable to consumer-facing fintech in India. The paper concludes by comparing the regulatory treatment with the risks inherent in some of the models to highlight some emerging questions for regulators. By presenting this landscape of regulation of consumer-facing fintech activities in India, the paper hopes to start a discussion on the more pressing policy imperative of how fintech should be regulated.
Read the complete paper here.
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[1] The author works with Dvara Research, India and can be reached at beni.chugh@dvara.com. The author thanks Ms. Bindu Ananth for her engagement in finetuning some of these ideas. The author also thanks Ms. Malavika Raghavan for her continued intellectual engagement in the process tracing to the stage of ideation. The paper has also benefitted from numerous discussions with Ms. Deepti George, Mr. Nishanth Kumar and Mr. Madhu Srinivasan. All errors and omissions remain those of the author.
