Amid cases of regulatory infractions in the start-up scene, industry stakeholders such as venture capitalists and founders expressed their views on the importance of regulators in India's fintech business. Noncompliance will get the organization nowhere, according to Siddharth Pai, 3one4 Capital's Founding Partner, CFO, and ESG Officer.
"You can dodge the regulators for a month, a year, or even longer, but you cannot get away from them. Fintechs must understand that the regulator is not someone to fight with; they are not your adversary," he said, without naming any specific start-up, during a discussion about compliance and management in the fintech space at the Start-Up Mahakumbh, a three-day event for stakeholders from across the sector.
He also noted that in an industry like fintech, which is separate from businesses like B2B or D2C, the purpose should not be to gain fast profits but to become an institution. If an entrepreneur is enthusiastic, creative, and visionary but disregards restrictions, failure is not an option, but a certainty.
"The regulator has the most thankless job. "If everything goes well, the industry gets credit, but if something goes wrong, the regulator is always blamed," Pai added.
Startup founders mirrored his sentiments, emphasizing the importance of fintech collaboration with industry watchdogs in order to revolutionize the business in light of changing times.
Instead of attempting to circumvent regulations, fintechs should focus on bringing about industry change rather than simply attaining product market fit, according to Harsh Jain, Groww's co-founder and chief operating officer. "If the companies are in line with the regulators and the government, they will be able to innovate well and reach the customers in a more sustainable market," he added.
Others criticized the administration for failing to keep up with technological advancements. "Regulators around the world, not just in India, are moving at a slower rate than technology and tech enterprises. As a result, regulatory organizations face a challenge in keeping up with corporations. "The faster they get there, the easier it will be," TCM Sundaram, founding partner of Chiratae Ventures, has told a credible source.
These ideas are consistent with the Reserve Bank of India's (RBI) recent regulatory decision against fintech behemoth Paytm for noncompliance.
On the third and last day of Start-Up Mahakumbh, Prime Minister Narendra Modi stated that with over 1.25 lakh start-ups, India is already on track to become a developed nation. He also stated that start-ups must play a critical role if the country is to become the world's third-largest economy.
