Here are the important rules that boost fintech's benefits while reducing its drawbacks or hazards

The terms finance and technology are combined to form the term fintech. According to industry statistics, India ranks second in the world for fintech adoption, with a growth rate of 87%. Our daily lives are becoming simpler thanks to financial technology, which is also forging an increasingly solid and powerful bond between the two.

The fintech business is a fast-growing industry. Thus, laws are quite difficult. Fintech is currently regulated in India based on its primary business. The Reserve Bank of India (RBI) oversees financial institutions that conduct banking, lending, deposits, and withdrawal operations. Some sites for crowdfunding and crowdlending are not subject to any specific restrictions but have come under SEBI's scrutiny. SEBI has been looking carefully at how to control these sites. The Insurance Regulatory and Development Authority of India (IRDA) oversees fintech collaborations with the insurance industry.

India has developed a favorable climate for fintech businesses to emerge and flourish in the sector, and it is very open to new technologies and entrepreneurs. The administration announced its plan to introduce digital money in a controlled environment in the 2022 budget. It imposed a fee on Bitcoin transactions but did not give cryptocurrencies legal status. Lending operations that do not have licenses under RBI rules or other applicable laws are restricted nationally by the RBI. Under the 2007 Payment and Settlement Systems Act, it has created the Payment System Operators license. To some degree, the Information Technologies Act of 2000 and the Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, protect data and prevent malicious online activity. To monitor development and innovations, identify issues, and regulate widely used UPIs and mobile banking apps, the RBI established an Internal Fintech Department on January 4, 2022.

As part of the strict regulation, efforts will be made to identify and mitigate any initial risks of possible data breaches and security concerns. Financial institutions must have specialized divisions, and these departments must be particularly vigilant in their operations. This will enable the fintech sector and financial institutions to self-regulate and prevent costly mistakes.

For the same, adequate reporting channels must exist. The internal threats also need to be under control. The Uber data leak is one such instance of inadequate internal controls within the business. Corporate governance is one of the most underutilized tasks in fintech businesses; it has been reported. RBI has proposed two recent changes in the fintech sector:

• Guidelines for encouraging small-ticket debit card merchant transactions that adhere to the zero-MDR (Merchant Discount Rate) standard.
• The RBI's most recent action is banning prepaid instruments connected to Buy Now Pay Later (BNPL) with credit limits. Marshall Lux, a Harvard professor, asserted that BNPL is a bubble, not a boom.

Almost all financial institutions collaborate with fintech companies for large-scale activities like back-office work, digital services, etc. Due to various factors, many financial businesses need to be more adequately regulated. Defining the governance structure of cryptocurrencies and the blockchain technology that powers them is challenging. Due to the self-governing and decentralized structure of the blockchain, it is highly challenging for governments and other third parties to regulate it.

Another factor is that fintech is developing quickly, making it challenging to stay up with the advancements and modifications. Establishing a specific regulatory framework is far more difficult. In other words, it is exceedingly difficult to establish a single, specific framework that can be applied to every technological advancement and change in the banking industry, both known and unknown. Despite being a benefit, fintech is also causing complicated issues for which there are few answers. A person's safety and data security are seriously in jeopardy. To address these threats, laws were developed, including the General Data Protection Regulation (GDPR), but are they sufficient? India is likewise developing a Personal Data Protection Bill of its own. Private data and sensitive information are at risk with every usage of digital and electronic transactions. The businesses exploit These bits of information in place of free services, sold, or otherwise abused for financial gain.