The newly formed Reserve Bank Innovation Hub is working on various innovative products to strengthen the payment and credit space in India. Currently, it is working on pushing instant credits.
“On an average it takes 15-35 days to get the loan worth Rs 2 lakh. We want Instant credit here. Not just for digital savvy millennials. But also the farmer out there in the remote village of Tamil Nadu, who can potentially get credit instantly. We are already working on it, and talking to a few state governments on how to get it done,” said Rajesh Bansal, CEO of RBIH.
Along with instant credit, Bansal said they are also working on suitable and affordable products.
“We want suitable financial products. We have not been able to deliver suitable financial products to large cohorts of population such as farmers, dairy farmers or MSMEs etc. A lot of work has been done, but a lot more needs to be done here,” Bansal explained.
FinTechs are rising, but need to achieve more
Bansal also highlighted turning points of Indian FinTechs, and said they will continue to rise.
“Indian FinTech market is currently valued at $31 billion. It will grow to $84 billion by 2025 at a CAGR of 22%,” he said.
The reason why FinTechs are growing is because they are offering unique solutions, and there are billions of opportunities in the domestic market.
“With Aadhaar, India is the only country in the world where 95% people have a digital identity. Financial institutions have been using electronic KYC and opening instant bank accounts. Also, we have crossed the 10-billion-transaction milestone already. Along with UPI, Bhim and BBPL; DigiLocker and Account Aggregator will democratize finance. No other country has such digital finance infrastructure,” he added.
Need to improve
While FinTechs and digital payments are rising, there are a few areas of concern that need to be worked upon.
Though digital payments are increasing, India’s cash to GDP ratio remains firm at 14.7% , much higher compared with OECD countries, he added.
There is also a divide between the urban and rural populations. Till now, only 43% of the rural and urban populations are active on the internet, and 46% in digital payments, he said.
“Valuation is one thing, but the question is that have we touched the last miles? We haven’t! We still have a long way to go. And there are so many opportunities that we have to tap,” he said.