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Technology
Data Safety Financial Regulators India RegTech Technology

Here's How RegTech is Transforming India's Regulatory Landscape

 

Businesses in India finish their GST returns for the month on the 20th of each month, believing their compliance work for the month is finished. However, they soon receive automated notices pointing out inconsistencies in their reporting. This procedure demonstrates how technology is now being used in India to monitor real-time regulatory compliance data. 

In another case, a borrower fails to make a loan payment, and the bank quickly reports the default to the Reserve Bank of India (RBI) via the CRILC platform. This data is then shared with other banks that are dealing with the same borrower. This illustrates how regulatory reporting helps to raise awareness and control non-performing assets (NPAs) in India. 

Furthermore, when a seller generates an e-invoice or an e-way bill, the recipient is notified. This results in a journal entry in the enterprise resource planning (ERP) system after reconciliation with purchase orders (PO) and goods received notes (GRN). This end-to-end automated workflow exemplifies how regulations and technology are promoting business efficiency. 

These instances demonstrate the far-reaching effects of regulatory technology, also known as RegTech. Technology is becoming increasingly important in managing the complex and ever-changing regulatory landscape. RegTech is critical in assisting organisations in efficiently implementing compliance procedures while also allowing regulators to monitor effectively.

The global RegTech market is expanding. According to Allied Market Research, it is expected to grow at a compound annual growth rate (CAGR) of 23.5% between 2018 and 2025, hitting a market value of $55.28 billion by 2025.

India's regulatory system is widely recognised for its complexity and diversity. Almost every sector is subject to a maze of regulations, ranging from manufacturing and energy to financial services and healthcare. The requirements for compliance can include anything from consumer protection and environmental standards to data security, taxation, and financial reporting. It has always taken a lot of time, money, and risk to navigate this regulatory maze without breaking any laws. 

RegTech's ascent 

The solution to these issues lies in RegTech, a subsector of FinTech. It alludes to the efficient and less expensive use of technology by businesses to help them comply with regulations. RegTech solutions offer businesses the capacity to optimise their operations and make well-informed decisions while adhering to legal requirements by automating compliance processes and utilising data analytics. 

Simplifying the procedures for compliance 

Simplifying compliance procedures is one of the main ways RegTech is changing the regulatory environment in India. In the past, in order to comply with regulations, businesses had to invest a large amount of financial and human resources in manually gathering, analysing, and reporting data. Dealing with intricate spreadsheets and sorting through mountains of paperwork were common requirements. 

RegTech solutions, on the other hand, employ automation and machine learning algorithms to quickly and accurately process huge quantities of data. In the financial sector, for example, RegTech tools can assist banks and financial institutions in automatically monitoring transactions for suspicious activity, lowering the risk of money laundering and fraud. RegTech can help the healthcare industry stay in compliance with patient data protection laws, ensuring that private data is handled securely. 

RegTech's future in India

RegTech in India has a bright future ahead of it. RegTech solutions will become more and more in demand as regulatory requirements become stricter and concerns about data privacy rise. Regulators in India, including the Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI), are beginning to see how RegTech can improve regulatory oversight. 

We may anticipate seeing even more cutting-edge RegTech solutions in the upcoming years that are specifically suited to India's distinct regulatory environment. These solutions will help businesses stay ahead of the curve by automating compliance and offering valuable insight regarding regulatory changes.
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User Security
Bank Cyber Security Bank fraud Bank Security Banks Cyber Risk Cyber Security Finance Financial Regulators RBI User Privacy User Security

How Banks Evade Regulators For Cyber Risks

 


As of late, the equilibrium between the banks, regulators, and vendors has taken a hit as critics claim that banks are not doing enough for safeguarding the personally identifiable information of the clients and customers they are entrusted with. As there has been rapid modernization in internet banking and modes of instant payments, it has widened the scope of attack vectors, introducing new flaws and loopholes in the system; consequently, demanding financial institutions to combat the threat more actively than ever. 

In the wake of the tech innovations that have broadened the scope of cybercrime, the RBI has constantly felt the need to put forth reminders for banks to strengthen their cyber security mechanisms; of which they reportedly fell short. As financial frauds relating to electronic money laundering, identity theft, and ATM card frauds surge, banks have increasingly avoided taking the responsibility.  

It's a well-known fact that banks hire top-class vendors to circumvent cyber threats, however, not a lot of people would know that banks have gotten complacent with their reliance on vendors to the point of holding them accountable for security loopholes and cybersecurity mismanagement. Subsequently, regulators fine the third-party entity, essentially the 'vendors' providing diligent cyber security risk management to the banks.  

The question that arises is that are banks on their own doing enough to protect their customers from cyber threats? Banks need to understand monitoring and management tools available to manage cyber security and mitigate risks. Financial institutions have an inherent responsibility of aggressively combating fraud and working on behalf of their customers and clients to stay one step ahead of threats.  

Banks can detect and effectively prevent their customers' privacy and security from being jeopardized. For instance, banks can secure user transactions by proactively monitoring SMS using the corresponding mobile bank app. They can screen phishing links and unauthorized transactions and warn customers if an OTP comes during a call.  

Further, banks are expected to strictly adhere to the timeframe fixed for reporting frauds and ensuring that customer complaints regarding unscrupulous activities are timely registered with police and investigation agencies. Banks must take accountability in respect of reporting fraud cases of their customers by actively tracking the accounts and interrupting vishing/phishing campaigns on behalf of their customers as doing so will allow more stringent monitoring of the source, type, and modus operandi of the attacks. 

“We are getting bank fraud cases from the customers of SBI and Axis Bank also. It is yet to be verified whether the data has been leaked or not. There might be data loss or it could be some social engineering fraud,” Telangana’s Cyberabad Crimecrime police said. 

“Police said that the fraudsters had updated data of the thousands of customers who received new credit cards and it was a bank’s insider who is the architect of this whole fraud,” reads a report pertaining to an aforementioned security incident by The Hindu.  

“This is a classic case to explain the poor procedure practised by the network providers while issuing SIM cards, and of course the data security system at the banks,” a senior police officer said. 

In relation to the above stated, banks should assume accountability for their customers’ security and shall review and strengthen the monitoring process, while meticulously following the preventive course of action based on risk categorization like checking at multiple levels, closely monitoring credits and debits, sending SMS alerts, and (wherever required) alerting the customer via a phone call. The objective, essentially, is for banks to direct the focus on aspects of prevention, prompt detection, and timely reporting for the purpose of aggregation and necessary corrective measures by regulators which will inhibit the continuity of crime, in turn reducing the ‘quantum’ of loss.  

Besides, vigorously following up with police and law authorities, financial institutions have many chances to detect ‘early warning signals’ which they can not afford to ignore, banks should rather use those signals as a trigger to instigate detailed pre-investigations. Cyber security is a ‘many-leveled’ thing conception, blaming the misappropriations on vendors not only demonstrates the banks’ tendency to avoid being a defaulter but also impacts the ‘recoverability aspects’ like effective monitoring for the customers to a great degree.
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Virtual Currency
digital currency Financial Regulators Islands Marhall Islands United States Virtual Currency

Marshall Islands to launch digital currency this year

The Marshall Islands' is gearing to release a digital currency this year, although officials acknowledged Friday there is much work still to be done to alleviate concerns of United States financial regulators as well as solve technological and logistical issues. However, the launch date of the currency, known as the "SOV", has yet to be decided.

“We plan to launch SOV this year,” said Barak Ben Ezer, chief executive officer of Neema, the Israel-based company that is partnering with the Marshall Islands government to develop the digital currency.

A primary issue for the launch is that following the boom in 2017 and early 2018, the crypto-currency market value has plummeted.

"We are working days and nights to prepare the foundations of the SOV initial coin offering, with the goal of being ready to launch once positive momentum is back to the markets," Ezer said.

"It will be done once all stakeholders are convinced that SOV is ready, risks have been mitigated, and momentum is building." Neema and the Marshall Islands are working through a multitude of US regulatory concerns as well as the technological and logistical side of issuing the SOV using blockchain technology.

The Marshall Islands, a tiny Pacific atoll nation with a population of just 55,000, passed legislation a year ago to develop digital currency as legal tender.

The plan has since been criticized by the International Monetary Fund, the US Treasury Department and bank officials in the Marshall Islands.

They argue it has the potential for a negative impact on existing banks and for money-laundering, but Ezer believed that once fully developed, the SOV will be one the safest monetary systems in the world.

The US Treasury has concerns about "anonymous digital currencies, such as Bitcoin, (which) are often used for illicit purposes by people who want to conceal their identity," Ezer said.
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