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.