The fourth Global Fintech Fest was held in Mumbai on September 5, 2023. The chairman of the Securities and Exchange Board of India (SEBI), Madhabi Puri Buch, made an announcement about the development of an artificial intelligence (AI) tool to detect instances of misselling by mutual funds during the event.
She stressed that, as reported in Business Today, algorithms will be essential in recognizing and detecting such instances.
“We are addressing the issue of potential misselling that could be committed by a mutual fund distributor, an agent, or by someone who is accountable to the mutual fund,” Buch stated. She agreed that solving this problem is extremely complex and requires intelligence.
If the entity has effectively managed its risk, the level of regulation would naturally be low. It will be much simpler for all regulated organizations to comply with regulations if we can transition from risk-based supervision to risk-based regulation, segmented regulation, and granular regulation thanks to AI, Buch continued.
Mutual Funds
Mutual funds currently regularly give SEBI important information about regulatory compliance. The best submission is a “nil report.” Buch drew attention to the possibility that there might be certain instances of misselling that go undetected by rule-based oversight. She underlined how important the AI technology will be in locating these instances. Buch clarified.
In connection with it, Buch emphasized the regulator’s enthusiasm for the introduction of fractional ownership of shares. She did note that at the moment, the legal system does not allow it, though. Buch emphasized the importance of creating reliable financial systems and utilizing fintech’s ability to promote economic growth. “Someone came up with that (idea), and we thought it was good.
Buch offered more details about the fintech industry’s involvement by reputable organizations. She continued, “Incumbent businesses are going through a major transformation and are starting to look, feel, and act more and more like fintech enterprises. Even our stock exchanges are fintech businesses today. Some mutual fund systems are, at their core, nothing more than fintechs. Because of the cash flows, personnel, and stability of their old enterprises, the incumbents have a significant advantage; as a result, when they apply the concepts of contemporary technology and contemporary design thinking, they transform into rocket ships. This process of change is continuous.
“India is the first jurisdiction in the world that has moved to the T+1 settlement,” Buch stated in reference to the T+1 settlement. One-hour settlements are what we’re referring to, and even that is a preliminary step toward immediate settlement. In a respectably brief amount of time, you will witness everything. Traditional things will soon change into highly trendy and current things. Markets and regulators alike can attest to this.
