'Cut the distance down': Here's the advice Nirmala Sitharaman gave to Infosys co-founder Kris Gopalakrishnan

“Distance brings distrust. So cut the distance down, and have greater engagement with the government.” This is the prompt advice finance minister Nirmala Sitharaman has to give when quizzed about building trust between the government and the industry. 

Sitharaman, after giving an inaugural address at the Global Fintech Fest, was taking questions from the audience. 

”Trust is one of the key components in building a sustainable ecosystem and affordable architecture,” began Kris Gopalakrishnan, co-founder of Infosys. 

“Can you tell us how do we ensure that the trust in the various players - industry, business, regulators and government and the security aspect of financial transaction can continuously be enhanced," asked Gopalakrishnan, who is currently the chairman of Axilor Ventures. 

Gopalakrishnan is also the chairman of the Global Fintech Fest Advisory board. 

“I don’t want to sound cliched but distance brings distrust. So cut the distance down, have greater engagement with the government. This is the government, whether it is the Prime Minister, ministers, group council of ministers or NITI Aayog, [all] are constantly available for engagement, discussion, exchange of ideas,” she said. 

“So greater the engagement, the greater the trust which gets built up. So, I think one sure shot way of retaining and building on trust is to keep the constant engagement going,” she advised. 

While Gopalakrishnan didn’t mention any specific issue, but the financial services industry has been demanding a reasonable merchant discount rate (MDR) on the UPI transactions, which are growing by leaps and bounds Currently, there is a zero MDR on person to person (P2P) and person to merchant ( P2M) transactions. 

In August, the RBI came out with a draft report asking for feedback from industry players on the likely charge on UPI payments. But the government was quick to suggest ‘cost recovery’ for industry players to be met through other means. It, however, didn’t elaborate on what this 'other means' could signify. 

“UPI is a digital public good with immense convenience for the public and productivity gains for the economy," said the finance minister. 

The government currently provides subsidies for QR code adoption in smaller geographies, which, industry says, is not sufficient. In the next phase, the cost of merchant acquisition is expected to go up dramatically as players expand into smaller geographies. Fintechs and banks are already incurring losses in UPI transactions. 

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