Finance Ministry’s FinTech report recommended that the RBI should make transaction and account history data of users available to fintech companies, after getting “consumer consent” and with “other appropriate safeguards”. It also said that all financial regulators should study the potential of open data access to enhance competition in financial services.
RBI should also make it mandatory for public sector banks to share databases of rejected credit applications with financial service companies. The report said that access to this database “would be especially helpful to alternate lenders”.
Use APIs for effective data sharing
Better fintech solutions can be built if data is available, “with guarding against misuses of the data”, the report said. Suggesting the use of APIs (Application Programming Interface) the report said that, 4,015 APIs have already been created on the government’s Open Data portal. API is a software interface that allows software programs to communicate with each other.
APIs can also be used to share real-time information on corporate direct tax and GST payments with both corporations and the government, eliminating the need to maintain separate accounts for tax purposes, the report suggested.
Creation of India MSME Stack: a unified database of all MSMEs
It said that an India MSME Stack can be built, where data on MSMEs can be pulled through APIs to facilitate trade financing, flow-based lending, insurance and bill factoring. It will essentially act as a unified database of all MSMEs, and have facilities like:
- Expansion of DigiLocker to include small companies to enable cloud storage of data
- Single unified invoice financing platform with GST integration for smoother payments and tax collection
- Policy changes and regulations to be available as APIs to enable one touch access
- Building on the TReDS (Trade Receivable Discounting System) platform to create a single invoicing platform for all vendors and suppliers.
MEITY should decide datasets to be shared via APIs
The report recommended that the Ministry of Electronics and Information Technology (MEITY) should decide on the datasets that can potentially be shared through these open APIs. The ministry will also have to set targets for the creation of these APIs.
Need to improve open government data
The report also said that there is a need to expand open government data. Noting that the Ministry of Science and Technology has formulated the National Data Sharing and Accessibility Policy, the report recommended NDSAP needs wider acceptance and implementation. “The Committee notes the power of open Government data in spawning new businesses and improving business models, subject to privacy laws,” the report stated.