Niti Aayog CEO says regulations must not stifle fintech innovation

Niti Aayog CEO BVR Subrahmanyam on Tuesday warned that regulations should not stifle innovation, or it will flourish somewhere else.

Speaking at the Global Fintech Fest 2025, Subrahmanyam said there is a need to move away from institution-based regulation to activity-based regulation.

"We should not come to a situation where regulation stymies innovation to a point that innovation happens elsewhere," he said.


Subrahmanyam said regulators need to be nimble-footed and create regulatory sandboxes.

"One more change in regulation that may be needed to enable the potential of Fintech to happen is moving away from institution-based regulation to actually activity-based regulation.

"Why do you regulate me as a bank?" he said.

Subrahmanyam said that 'from innovation to scale' is a model which should be adopted by regulators.

"I could be the same institution, regulate me for the product or activity I am doing.

"If I am doing a banking product, regulate me as a banker and apply all your norms there. If I am distributing a fund, regulate me as a distributor for that, rather than as a banker and allow me to do all that," he opined.

The Niti Aayog CEO informed that the finance ministry and regulators are in deep conversation to see how this can happen.

Artificial intelligence (AI) has emerged as a disruptor on a scale which is pretty unprecedented, Subrahmanyam added.

"I do not think the worry is about jobs being lost (due to AI). It is about jobs being replaced by new types of jobs. I think that is the larger thing," he said.

According to him, AI is going to help completely re-engineer processes and change the way some tasks are performed.

"AI can be a far more efficient way of actually doing things, and it is time to start thinking of that," he said.

And it would mean, Subrahmanyam said, there will be a constant tussle of friction between regulators and the FinTech sector or the innovators.