Don’t we all remember the most iconic scenes from Hollywood Sci-Fi movies wherein the futuristic, uber-cool humans used technology still unheard of? Well, the sci-fi enthusiasts will have to start thinking of even more advanced technologies as what was once fiction is swiftly turning into reality.
Imagine yourself going to your favorite store, adding products to your cart and at checkout, a biometric scanner scans your eye or fingerprint and the next thing you know your payment is done. The checkout experience gets so smooth and fast, that the most strenuous component of shopping i.e. standing in long queues at the checkout counter, becomes a walk in the park. What if your application for a loan gets approved within seconds? In future, you might not even be required to carry debit/credit cards. You could maybe just approach some sort of credit issuing counter, scan your retina or fingerprint, and get instant credit alloted to you.
Today, many fintech startups in India are pushing the threshold and taking what was once an aspiration for a large chunk of the Indian population, and turning it into reality. Naturally, such a momentous feat cannot be achieved by the fintech companies single-handedly. The government’s leadership is playing a vital role in this. The initiatives of the Government of India such as Digital India and Financial Inclusion are indeed aiding in taking this vision to a larger population of the country.
The BharatNet project under the aegis of Department of Telecommunication has allowed India to achieve a teledensity of 82.93% and over 1.10 lakh Gram Panchayats are now equipped with Optical Fiber Connectivity. In collaboration with Bharat Broadband Network Limited, the Government aims to provide connectivity to 250000 Gram Panchayats.
88.2% of the Indian populace has now been enrolled for Aadhaar. So, mandating the linking of Aadhaar with PAN will bring a lot of information about an individual on a single platform. Aadhaar has also been made mandatory for availing a lot of services such as mobile connection, LPG Gas Connection, insurance, etc. Sophisticated algorithms can then be employed, utilizing the information collected at this common platform, for instant sanctioning of loans and extending credit at POS.
Even today over 65% of India’s population is unbanked and lacks access to financial services and financial support in terms of credit. There are over 50 million SMEs in India and less than 10% have access to credit. The primary reason for this lackluster capital infusion to the SME segment is the dearth of credit history. Banks are reluctant to lend to the SME segment on account of huge NPAs they have incurred from the bigger players. Therefore, they find lending to SMEs, with little or no credit history, a risky proposition. The problem can, however, be solved with the use of alternate data. This is where the flagship initiative of GSTN comes into the picture.
GSTN can act as a central repository of all the transactions that a business does and can thus act as a proxy for various financial statements that are generally required for underwriting. Public-Private Partnerships can be explored to create a platform that makes access to this information possible.
Allowing people to create simple, no-frills current and savings accounts and giving them access to easy credit while keeping due diligence in mind, will go a long way in unleashing the untapped potential of the bottom-of-pyramid section of Indian economy.
The present government certainly seems to have the political will to make India future-ready. India’s IT capital along with cost-effective execution of various initiatives will go a long way in making India a hub for futuristic and technology-enabled landscape for low cost and light speed financing.