(15 August 2022) Government Data Roundup: Recommendations of the Working group on Digital Lending, multiple standing committee reports among the data & reports released recently

In the ninth edition of the ‘Government Data Roundup’, we cover RBI’s report of ‘Recommendations of the Working group on Digital Lending – Implementation’, Survey of Foreign Liabilities and Assets of Mutual Fund Companies – 2021-22, the ‘Internet in India’ report by IAMAI, and multiple standing committee reports among others.

In the ninth edition of the fortnightly government data roundup, we look at RBI’s report of ‘Recommendations of the Working group on Digital Lending – Implementation’, Survey of Foreign Liabilities and Assets of Mutual Fund Companies – 2021-22, and the ‘Internet in India’ report by the Internet and Mobile Association of India (IAMAI) and KANTAR.

In addition to the above reports, we look at a few important Parliamentary Standing Committee reports that were tabled in the recently concluded 2022 monsoon session. These include action taken reports by the Government on

• Observations/recommendations contained in the Thirty-First Report (Seventeenth Lok Sabha) on ‘Availability of Medicines & Medical devices for COVID Management’ of the Ministry of Chemicals and Fertilizers (Department of Pharmaceuticals).
• Observations/Recommendations of the Committee contained in their Twenty-Third Report (Seventeenth Lok Sabha) on ‘Assessment of Scheme for Implementation of the Rights of Persons with Disabilities Act, 2016 (SIPDA)’
• Observations/ Recommendations of the Committee contained in their Sixteenth Report (Seventeenth Lok Sabha) on `Social Security and Welfare Measures for Inter-State Migrant Workers` relating to the Ministry of Labour & Employment and some other Ministries/Departments concerned.
• ‘Evaluation of wind energy in India’ by the standing committee on energy.

Brief about the report/data:

Designing and delivering credit services through the digital mode has become more pronounced through the innovations & the use of technology in the financial sector. However, like all innovations come with a new set of risks, digital lending also has some risks, which if unmitigated erodes public trust in the financial system. Accordingly, the RBI had set up a working group on ‘digital lending including lending through online platforms and mobile apps’ (WGDL)’ in January 2021. The working group submitted its report, and it was placed in public domain. The current press release is regarding the implementation of the recommendations of the report.

Key Highlights:

Recommendations accepted wholly by RBI are:

• The credit limit cannot be automatically increased unless the consumer gives their explicit approval.
• Lenders must record the borrower’s economic profile and make an auditable determination of the borrower’s creditworthiness.
• Clearly defined policy rules for data storage. The systems connected to the Digital Lending Applications (DLA) should not save any biometric information linked to client. 
• Information on any third parties who are permitted to gather personal data via DLA must also be disclosed. Guidelines for resolving security breaches must be put in place.
• Regulated Entities (REs) and Lending Service Providers (LSPs), which provide support to REs, should be required to offer digital lending only if they abide by several fundamental technological standards and cybersecurity criteria.

Recommendations accepted in-principle which require further examination:

• Accounts that are frequently managed from an overseas or different IP address and do not match the account holder’s KYC profile must be monitored by banks.
• REs must notify the Self-Regulatory Organization (SRO) of LSPs engaging in unethical behaviour or violating regulatory standards so that they can be included in a negative list.
• Digital lenders should implement moral Artificial Intelligence (AI) that prioritises safeguarding the interests of customers and encourages openness, diversity, objectivity, accountability, dependability, security, and privacy.
• The borrower will be notified through email or SMS of any access to or inquiry into credit information by any RE or LSP from Credit Information Companies (CICs).
• The Certificate of Registration of NBFCs who have been granted a Certificate of Registration with the provision of digital lending but who have not been doing so for a reasonable amount of time may be reviewed with the appropriate supervisory follow-up to prevent any unethical practises by NBFCs.

Recommendations for consideration of the Government of India

• The government may consider about drafting a law to ban unregulated lending activities (BULA), which would apply to all organisations not specifically permitted by the RBI or registered under any other law to engage in public lending. 
• A third-party organisation called the Digital India Trust Agency (DIGITA) needs to be established so that consumers only utilise authorised and reputable DLAs. Before such apps may be made available for download through an app store, DIGITA must perform the duties of certifying DLAs. For the purposes of law enforcement, eligible apps should be regarded as unauthorised if they lack the “certified” signature of DIGITA.
• The KYC requirements for issuing new or replacement SIM cards need to be more stringent, and mobile network operators need to be held responsible for any violations and flaws.
• Establishing a National Financial Crime Record Bureau, like to the National Crime Records Bureau, with a data registry accessible to REs and resembling crime and criminal tracking networks and systems.
• The local law enforcement and police departments must aggressively monitor the areas under their control to ensure that no unlicensed call centres are operating there or that VoIP calls are being spoofed or converted to GSM calls, among other things.
• Registrar of Companies may also consider making suitable arrangements for real-time data sharing with RBI on the de-listing of such shell companies to enable RBI to take further action.

Brief about the study:

This survey by the RBI is used to collect basic information regarding the asset management companies (AMCs) and mutual fund companies pertaining to the assets and external liabilities. This is important to collate and compile basic statistics regarding the performance of the financial system. The data released is only at the aggregate level and utmost secrecy is maintained regarding the institution-wise data.

Key highlights:

For Mutual Funds (MF) companies

• Due to the surge in units issued to non-residents, the foreign liabilities of MF businesses increased by USD 3.4 billion during 2021–2022. As of March 2022, they were USD 17.7 billion (at market value).
• Due to an increase in their equity holdings, MF businesses’ foreign assets climbed by USD 3.6 billion over the year, reaching USD 6.5 billion in March 2022.
• As a result, MF businesses’ net foreign liabilities, which were USD 11.3 billion in March 2022, were nearly unchanged from a year prior.
• Non-residents of Singapore, the United Arab Emirates (UAE), the United Kingdom (UK), the United States of America (USA), and the United Arab Emirates (UAE) jointly had a share of roughly 44% of the total MF units held abroad, both at market value and face value.
• For MF companies, the USA and Luxembourg remained their top international investment destinations.

For Asset Management Companies

• In March 2022, AMCs’ foreign liabilities and assets totaled USD 5.7 billion and USD 0.1 billion, respectively, which was roughly the same as the previous year.
• Guernsey and Singapore received more than 95% of the very modest foreign investments made by AMCs.
• Non-residents of Japan and the UK jointly own close to three-fourths of FDI among AMCs.

Brief about the report:

In light of the government’s strong promotion of the idea of a digital economy worth USD 1 trillion, digital services have become significant for the nation. Government programmes like e-governance promotion and the Digital India initiative have made it possible for the Internet to expand throughout society. The Internet & Mobile Association of India (IAMAI), which was founded in 2004, is a young and active association that speaks for the entire spectrum of digital enterprises in India. Internet in India by IAMAI and its associated institution is a comprehensive outlook of the internet penetration in India.

Key Highlights:

• According to the survey, there are currently 692 million active internet users in India. A large portion of growth is still being driven by rural India (351 Mn users with 37% penetration), as urban India (341 Mn users with 69% penetration) appears to have reached a plateau.
• By 2025, it is projected that India will have 900 million internet users, with rural expansion driving this increase.
• Goa and Bihar have the highest and lowest internet penetration rates, respectively, among the states.
• In terms of gender distribution, male internet users outnumber female users in India, with about identical gender ratios across urban and rural users. 
• The top three online activities in India, according to use cases, are entertainment, communications, and social networking. 
• While OTT service prevalence in rural India is on par with that in urban India, other digital service penetration—including online gaming, digital commerce, and digital payments—remains biased in favour of urban users.
• Currently, 762 million Indians—63% of whom live in rural areas—have not yet adopted the internet. The main impediment, coupled with ignorance, is still “difficulty to understand the Internet,”, especially in rural India.

Brief about the report:

The COVID-19 epidemic is one of the biggest public health crises the world has ever seen, and it is having unheard-of severe effects on our social lives, economics, and health. The parliamentary standing committee chose and decided to examine the subject “Availability of medicines and medical devices for COVID management” on a priority basis because foolproof measures are required to ensure the availability of medicines and medical devices to the people of all regions of the country during the COVID-19 pandemic.

Key Highlights:

• The Committee recommended that the Union Government, in cooperation with the State Governments, organise nationwide online training programmes for all registered medical practitioners, whether in Government or Private hospitals, on the rational use of Remdesivir and other COVID-19 drugs included in the National Treatment Protocol. The Committee emphasised the necessity of a nationwide training programme for the rational use of COVID-19 treating medicines. The Department’s response is silent on the Committee’s suggestion.
• The Department of Pharmaceuticals and NPPA were urged to create a new price control regime specifically for medicines and medical devices for COVID-19 management. Under this regime, the distinction between scheduled and non-scheduled drugs may be eliminated, and all such medicines and medical devices are placed under price control with no annual increase in prices. The Committee restated its advice in light of the government’s actions.
• The Committee strongly recommended that the Department of Pharmaceuticals submit a proposal to the GST Council in coordination with the Ministry of Health and Family Welfare (MoHFW) to investigate the possibility of exempting all necessary medications and medical equipment used to treat COVID-19 from the scope of GST. Until the epidemic is finished, other basic customs duty exemptions on a variety of medications and medical equipment relevant to COVID-19 may also be maintained. The committee reiterated its advice after hearing the government’s response.

Key Highlights:

• The Committee believed that the Department must exert more effort than simply sending routine letters to raise awareness, sensitise, and remind States/UTs every year to submit viable proposals if they want to see this sub-Scheme succeed in creating a barrier-free environment both physically and virtually. The Committee reaffirmed that the Ministry should present some unconventional suggestions for the successful execution of this component after considering the Government’s response.
• Concerned about the alleged violations of the Rights of Persons with Disabilities Act of 2016, the Committee had advised the Ministry to quickly designate Special Courts for PwDs and pursue State appointments of State Commissioners for PwDs. In light of how the Act’s provisions are being violated, the Committee urged the Ministry to give this issue specific attention to significantly advance the cause of preserving the rights of people with disabilities.
• Only 10 States had established helplines to answer the inquiries or difficulties of PwDs, thus the Committee has advised proactive measures to urge more States to do the same, ensuring that coverage is available throughout India. However, the Committee found that there hasn’t been much advancement in this area, with only 11 States now included in the coverage. The Committee is unable to comprehend the Ministry’s apathetic approach to encouraging additional States to complete this most straightforward of jobs. The Committee requested that the Ministry keep track of the implementation’s progress with the State Governments and UTs on a continuous basis in light of the requirements associated with the establishment of helplines for the proper redress/resolution of issues of PwDs in all States and UTs.

Key Highlights of the report:

• The Committee was happy to report that, following considerable wrangling, the e-Shram portal was eventually launched on 26 August 2021, with the goal of building a thorough National Database of Unorganized Employees (NDUW) for all different kinds of unorganised workers. The Committee urged the Ministry of Labour & Employment to make concerted efforts in coordination with the States/UTs in order to secure the registration of all categories of unorganised workers now that the Portal has been established.
• In order to increase the number of eligible employees covered under the Act and hence eligible for the benefits of the ESI Scheme, the Committee recommended that all reasonable measures be made to extend the coverage of the ESI Act to all Districts by the deadline.
• The Committee firmly believed that the Ministry should investigate whether it is possible to include an express provision for unemployment benefits for workers in the unorganised sector through the ESI Scheme in accordance with RGSKY and ABVKY. This is especially true now that the e-shram Portal has already been launched to register all different kinds of unorganised workers.
• The Committee urged once more that every effort be made by the Department of Food and Public Distribution in coordination with the State Governments to ensure that food grains are continuously made available to the most vulnerable sections of society rather than being piled up for months at a time in order to honour the PM Gareeb Kalyan’s original intent. 
• The Committee urged the Department to ensure prompt receipt of the social audit reports from all the States and UTs to establish responsibility and implement corrective action. The Committee further reiterated the need to make the results of these social audits and the Department’s response public to ensure the transparency of the Scheme.
• The committee applauded the introduction of the mobile app “Mera Ration” to support the One Nation One Ration Card Plan (ONORC). It believes that the initiatives are sound & should be continued to maintain a reliable database of migrant labourers. 

Key Highlights of the report:

• As of 31 May 2022, the total installed wind power capacity was just 40.71 GW or less than one-fifth of the commercially exploitable potential. The Committee believes that the country’s wind potential has only been partially utilised, which represents underutilization of the natural resources that are currently available. To preserve a balanced energy mix and to help the wind energy sector realise its potential, the Committee advised that it be given fair priority over solar energy.
• The Committee believes that it is necessary to repower the older wind turbines because they not only have reached the end of their useful lives but also are located in the prime wind places.
• The Committee advised, as a result, that offshore wind energy projects be developed off the coasts of Gujarat and Tamil Nadu following thorough, timely environmental impact assessments. The Committee also hopes that first Viability Gap Funding will be made available to make offshore wind energy projects financially viable. Additionally, the Committee believes that accompanying transmission infrastructure must be established to allow for the evacuation of power from these projects.
• The Committee recommended that the Ministry encourage the construction of wind-solar hybrid power plants so that the maximum installable potential of more than 50 GW can be utilised with the added advantages of greater grid stability, decreased generation variability, and effective utilisation of evacuation infrastructure, and best use of land resources.
• The committee recommended that, given the significant non-payment of dues by the discoms, the ministry seek timely payment of dues to wind energy developers with the appropriate State Governments and inform the Committee of the outcome.

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