Amid the rapidly evolving business landscape, the importance of Regulation Technologies, commonly referred to as RegTech, cannot be overstated. RegTech encompasses a wide range of technological solutions designed to streamline and optimize regulatory compliance processes. These innovative tools provide companies with the means to not only navigate the complex web of regulations but also to leverage them as catalysts for expansion.
India Business and Trade spoke with Rishi Agrawal, Co-founder and CEO, TeamLease RegTech, on the various aspects of regulation technologies, including technological advancements in the field and the need to optimise Ease of Doing Business (EoDB), through effective execution of rationalization, digitization, and decriminalization for the growth of a business.
IBT: Automation, ML, and AI, are all around us, within every industry. How is Teamlease utilising these along with the human workforce, in providing services to its clients?
Rishi Agrawal: Technology has always meant to simplify activities, but in the last couple of decades, tech-driven innovations have changed the way we do our day-to-day chores. These innovations supported by AI/ ML have either made the activities simpler or eliminated any human intervention. Along similar lines, we have been investing heavily in end-to-end automation for compliances as well, which includes the automatic generation of compliance documents with minimal or no manual inputs and facilitating straight-through filings via APIs.
Corporate compliance monitoring methods have matured with the introduction of regulatory technologies. Yet, preparing returns, registers, and challans, among other sorts of compliance, remains time-consuming and costly. Automation is required for organisations to lower the cost of compliance and achieve timely, accurate, and transparent compliance.
Significant developments are being made in automating the generation of compliance documents for multiple regulators, such as Labour Laws (Registers and returns), SEBI requirements (PDF Intimations/XBRL Filings), MCA Laws (Meeting documentation and E-Forms / other Filings), and so on. These automation layers will digitise the whole compliance process, reducing the need for manual intervention and resulting in improved accuracy and a significant decrease in compliance costs.
Currently, our automation layer supports organisations in the automatic generation of compliance documents for labour laws and secretarial laws. Additionally, we have been writing to various Central and State authorities for the implementation of a digital ecosystem for RegTech players, which will facilitate the seamless filing of regulatory returns via empanelled vendor platforms. In addition, TLRegTech monitors over 2,000 government websites to keep track of regulatory updates published by authorities. This serves as a use case for AI/ML automation wherein the platform is able to keep itself updated with all compliance and regulatory changes constantly.
IBT: Though MSMEs have lesser compliance to adhere to, how can regtech still play a significant role for small businesses?
Rishi Agrawal: MSMEs are much smaller in scale as compared to large companies and consequently have lower compliance obligations. As such, they more often than not outsource their compliance requirements to third-party professionals such as labour consultants, direct and indirect tax consultants, EHS consultants, and practising Company Secretaries (CSs). However, these consultants are still operating in an ad-hoc, paper-based and people-dependent manner. TL RegTech is building a stack to digitise these consultants. We already offer solutions for labour consultants and CSs. Labour consultants can leverage the AVACOM Labour platform by automating the generation of returns registers and challans for their MSME clients. The platform enables them to generate these compliance documents in a matter of a few clicks and a handful of minutes. The platform is available to the consultants via web and mobile and allows them to obtain a list of all their documents across periods in a centralised repository.
Similarly, AVASEC is a tool for CSs and aids them in managing the end-to-end lifecycle of secretarial compliances for MSMEs. It digitises their workflow for board meeting management and automates the generation of records and compliance documents. In addition, it gives the CS access to a compliance calendar to better keep track of pending and upcoming compliances.
IBT: Which are some of the biggest industries your company is catering for?
Rishi Agrawal: We have customers across the economic sectors and industries. Our clients include players from the automotive industry, pharmaceutical industry, FMCG sector, alco-beverage industry, chemicals industry, IT and ITES sector, financial services sector, retail industry, electricals and electronics industry, logistics industry, and textile industry.
IBT: In terms of conducting due diligence for regulatory compliance, how does the time taken using regtech solutions compare to traditional methods?
Rishi Agrawal: TeamLease RegTech has a digitized compliance database that covers 1,536 acts and rules and 69,233 compliances across 28 states and 8 Union Territories. These compliances can be searched and sorted on the basis of Acts, Rules, Risk levels, Penalty type, Industry, and Compliance Category, amongst others. Our company is ahead of the curve in terms of keeping track of the fluid nature of the compliance ecosystem by tracking over 2200 government websites that publish regulatory updates and delivering the relevant updates typically within 24 hours of notification. Our platform is built with direct input and feedback from compliance. The workflows, the interface, and the design thinking make usability unique.
We provide our clients with a dedicated support and training team that consists of legal and technology experts. As soon as a client is onboarded, the support team handholds the clients and trains them on how to use the compliance management system. A thorough assessment of applicable compliances, along with a risk assessment of all pending compliances, is done. This helps the clients identify and understand areas that require attention. Client compliance teams are provided with training and support materials and ongoing support to address any and all issues that may arise. Compliance teams are trained in every aspect of the compliance management platform to help them adapt and effectively use the software for managing their compliance processes.
IBT: Your company released a comprehensive report in 2022 titled “Jailed for doing business” post which the government of India introduced the Jan Vishwas Bill. What are your thoughts on the need for such provisions to promote ease of doing business?
Rishi Agrawal: Over decades, the Indian entrepreneur has constantly dealt with mistrust and overregulation. The ‘Jailed for Doing Business’ monograph discovered that the business universe in India consists of 1,536 Acts, of which 843 (54%) contain clauses prescribing jail terms. Of these, 29% are at the union level, and 71% are at the state level. The threat of imprisonment has survived decades of economic reforms, with 26,134 compliances carrying imprisonment out of the 69,233. Under 86% of these clauses, an entrepreneur can land in jail for up to 3 years. Five states (Gujarat, Punjab, Maharashtra, Karnataka, and Tamil Nadu) have over 1,000 clauses with imprisonment as a penalty for non-compliance.
The microscopic oversight has become a barrier to job creation and business growth. For instance, entrepreneurs must oblige with the provision of spittoons, places for storage of clothing and painting the inner walls of canteens, and whitewashing of walls, failing which they face imprisonment. The Minimum Wages Act, of 1948, provides for imprisonment for failing to meet procedural or logistical requirements, such as providing notices showing the date of payment of wages, maintenance of registers and records, and the disbursal of identity cards and service certificates.
The Jan Vishwas Act, 2023 is another milestone in the quest for ensuring ease of doing business by demystifying the business regulatory framework in the country. The Act helps establish a framework for examining the decriminalisation of employer compliance. While decriminalising 183 of the staggering 26,134 provisions does not significantly move the needle, it lays the groundwork for the next wave of reforms. The Act tackles the issue of criminality by its horns and removes provisions that prescribe both imprisonment and fines as methods of penalty. It further provides for an increase in the fines and penalties by 10% every 3 years. While it removes imprisonment as a possibility and retains fines, it has also introduced the possibility of compounding offences in certain cases. The methodology used is similar to the one used for decriminalising the Companies Act, 2013 (Companies Act).
In order to optimise India’s economic capabilities, it is critical to afford entrepreneurs due respect and esteem. Priority is given to decriminalising the regulatory ecosystem, beginning with eliminating criminal liability for errors caused by procedural and technical errors. The imposition of imprisonment should be limited to serious offences that involve criminal intent, while monetary fines should serve as the predominant deterrent. In order to optimise Ease of Doing Business (EoDB), the effective execution of the three-vector framework comprising Rationalisation, Digitisation, and Decriminalisation requires unwavering commitment and determination.
Rishi Agrawal is the chief executive officer and co-founder of TeamLease Regtech, the compliance services arm of job portal TeamLease Services Ltd. He also served briefly as a subject matter expert on Economic Empowerment for the Indian government. He completed his B.Tech in Mechanical Engineering from the Indian Institute of Technology (Banaras Hindu University), Varanasi and later went to the Indian Institute of Management, Calcutta.
