Page 36 - Banking Fiannce March 2018

ARTICLE

is also seen as an encouraging idea towards digital
transactions that will ultimately help the MSMEs. As per
report of the leading newspaper Mint, Finance ministry may
give GST Compliant MSMEs access to loans at discounted
rates to reward early adopters and encourage others to
comply.

Security Issues:- Safety of loans for the lenders is not
guaranteed as the portfolio is totally unsecure in nature, but
Factors that support Demand for Fin one of the fundamental rule of economics applies
everywhere, Higher the Risk, Higher the profit. On the other
Techs :- hand the Fintech companies focus a lot in scrutinizing the
1. Rapid expanding of Internet and Mobile penetration applicants in determining their eligibility that gives a lot of
comfort to the lender. GOI is also in the process of creating
2. Digital savvy Young Generation
a Registry of movable assets of MSMEs which will enable
3. Supporting regulatory environment the lenders to access whether such assets are pledged with
4. Inefficiencies prevailing in the financial sector any other lenders before they sanction the loan. However,
the loans through P2P platform are considered as unsecure
5. Unmet demand from the under banked/unbanked
and the repayment entirely depends upon the wish of the
population. Two billion people on the earth are still
financially excluded of them 21 percent are unbanked borrower.
living in India.
Fin Techs in Bank's Business Model: - Many banks are in
the process of partnering with the Fin Techs. Banks can
Need to regularize the lending:- Looking to the growing
credit needs of the MSMEs and lead taken by the Fin Techs profit from the Fin Tech Revolution if they opt for a new
with the technology reach, it was felt by the regulator that model of banking based on customer values. This model may
this sector cannot be left unwatched or un regularized. also be opened to the external world provided the bankers
focusing the MSMEs, embrace innovation at their core. They
Reserve Bank of India, the regulator for banks and financial
need to transform the entire corporate culture increasing
institutions, after due deliberations has come out with
the level of Risk appetite if they wish to survive in such a
regulatory norms for the P2P Lenders too. They will be
treated as NBFCs only in addition to the Capital Adequacy competitive business environment. The new model will help
norms with certain caps. them maximizing the profit and business volume by a greater
reach to the first time customers.
Government Interventions to support fin Collaboration with Fin Techs will reduce the cost of funds by

tech in India- deploying the surplus funds in a faster way and ultimately
the yield on advances will go up. Although the teething
Promoting fin tech :- The Government of India encouraged problem will always be there initially to understand the
startups by its popular program Startup India that was also system and migrating it with the traditional one, yet the
supported by SEBI by easing of startup listing norms. RBI
bankers will be able to create a huge customer base which
started Payment System Innovation awards in the field of
will help them cross sale the customized products.
Finance and Technology . Telangana Government's T- Hub
is the few steps towards promoting Fin Techs. GOI is also Finally, the growth engine of Indian Economy (MSMEs) are
creating an enabling environment for fin techs through likely to see ACHHE DIN in days to come by way of
various initiatives i.e licensing of payment banks, issuance alternate/multiple sources of getting timely credit due to
of guidelines on P2P by RBI and SEBI regulations on Crowd easy access to the system and continuous government
funding. initiatives.

The government has shown its clear cut intention to (Source: - few contents have been taken from the study
promote and improve mobile and internet usage. This step material received from RBI/CAB ).

36 | 2018 | MARCH | BANKING FINANCE