A fine balance is required between fostering innovation and protecting the regulatory system’s integrity, Department of Financial Services (DFS) Secretary M Nagaraju said here on Tuesday. He was speaking at CII Financial Inclusion and Fintech Summit.

       Nagaraju stressed the importance of regulatory compliances to be able to stay one step ahead of fraudsters in the industry.

       “Data privacy and cybersecurity are some of the imperatives that need to be ensured along with a thriving fintech industry,” said Nagaraju, highlighting the need for greater financial literacy not just for younger people but also for the older generation to democratise the benefits emerging from greater innovations.

       “India’s fintech industry is the largest in the world and unlike in some other parts of the globe, it’s spread across several sectors. The government is making a lot of efforts to foster ease of doing business and reduce compliance burden for fintech companies,” Nagaraju said.

       The comments come against the backdrop of alarming data on UPI-related frauds given in the Lok Sabha. The data presented by the Union finance ministry stated that UPI fraud incidents surged by 85 per cent in FY24, rising from 7.25 lakh cases involving Rs 573 crore in FY23 to 13.42 lakh cases involving Rs 1,087 crore. In the current financial year (FY25), over 6.32 lakh fraud incidents involving Rs 485 crore have already been reported, marking a significant concern for stakeholders in India’s digital payments ecosystem.

       Moreover, the DFS Secretary said that the government is making continuous efforts to provide a facilitating ecosystem to the fintech industry, including robust digital infrastructure as well as schemes such as PM Suraksha Bima Yojana and Atal Pension Yojana, which could bring huge opportunities to the industry.

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       In the same event, Shaji KV, chairman, National Bank for Agriculture and Rural Development (Nabard), emphasised the need to bring about technological transformation in a more democratic manner, especially in the rural economy. He highlighted that while bigger banks have benefited from greater digitisation, cooperative banks and regional rural banks (RRBs) may not have reaped the benefits to a similar extent. Given that these banks may not have sufficient funds to invest in new technologies, it is important that all stakeholders make a greater effort to include RRBs and cooperative banks in new digital endeavours.

       Sameer Nigam, co-chair of CII National Committee on Fintech and founder & CEO of PhonePe Pvt Ltd, said that the real purpose of technology is to bring in transformation democratically and that should be the driving agenda for all stakeholders — how to induct people who have been left out into the system.

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