May 10, 2021
"Despite impressive gains in mobile and internet banking, there remain gaps in access to financial services for small businesses and others.” Dr. Rajiv Kumar, Vice Chairman, NITI Aayog
"In the post-Covid era, building resilient systems and encouraging business models that could be change-makers of the future is crucial.” Amitabh Kant, CEO, NITI Aayog
"The usual ‘banked’ criterion for financial inclusion is now set to undergo a paradigm shift with a rise in connected commerce, online shopping, e-marketplaces, and an ubiquitous mobile network.” Ajit Pai, Head, Economics and Finance Cell, NITI Aayog
“Digital payments are the synovial tissue that connects rural and urban India. In an interconnected world, interoperability is key to financial inclusion, else we risk creating islands of success.” Ari Sarker, Co-President, Asia Pacific, Mastercard
NITI Aayog, the premier policy Think Tank of the Indian Government in association with Mastercard just released a report titled ‘Connected Commerce: Creating a Roadmap for a Digitally Inclusive Bharat’. The report identifies challenges in accelerating digital financial inclusion in India and provides recommendations for making digital services accessible to all its 1.3 billion citizens.
The report is the outcome of a series of roundtable discussions held in October and November 2020 between experts from the government, banking sector, the financial regulator, fintech enterprises, and various ecosystem innovators. The discussions were led by NITI Aayog as knowledge partner, supported by Mastercard and curated by business advisory firm FTI Consulting.
In his introduction remarks, Dr Rajiv Kumar, Vice Chairman, NITI Aayog, said, “India is seeing an increasing digitization of financial services, with consumers shifting from cash to cards, wallets, apps, and UPI. This report looks at some key sectors and areas that need digital disruptions to bring financial services to everyone.”
In pursuit of this goal, the report addresses key issues like acceleration of digital financial inclusion for underserved sections of Indian society, enabling SMEs to ‘get paid, get capital and get digital’ and access customers, and ensure their continued resilience as well as unlocking the promise of digitization in India’s agriculture sector.
Amitabh Kant, CEO of NITI Aayog put it succinctly: “Fintech players, alongside the conventional financial services providers, hold the key to transforming the way the economy functions and increasing access to credit for our industry. This will enable us to make the Indian digital financial landscape convenient, safe, and accessible to all.”
Key recommendations of the report:
– Strengthening the payment infrastructure to promote a level playing field for NBFCs and banks.
– Digitizing registration and compliance processes and diversifying credit sources to enable growth opportunities for MSMEs.
– Building information sharing systems, including a ‘fraud repository’, and ensuring that online digital commerce platforms carry warnings to alert consumers to the risk of frauds.
– Enabling agricultural NBFCs to access low-cost capital and deploy a ‘phygital’ (physical + digital) model for achieving better long-term digital outcomes. Digitizing land records will also provide a major boost to the sector.
– Making city transit seamlessly accessible to all with minimal crowding and queues, leveraging existing smartphones and contactless cards, and aim for an inclusive, interoperable, and fully open system such as that of the London ‘Tube’.
“With this report, we hope to highlight key elements of a roadmap India can follow to achieve the next level of digital transformation, driven by providing real value to the next half-billion of society that will go online and onto digital transactions in the next three years,” said Ari Sarker, Co-President, Asia Pacific, Mastercard.
The full report can be accessed here