Opportunities and Challenges of FinTech

Keynote Address by Shri Shaktikanta Das, Governor,

Reserve Bank of India
Delivered at the NITI Aayog’s FinTech Conclave 2019
on Monday, March 25, 2019

Presented by Group A
Abhishek kumar(110001)
Abhishek kumar (110002)
Abhishek Raj (110003)
Adarsh kumar Mishra(110005)
 The RBI Governor Shri Shaktikant Das shared their experience at NITI Aayog Fintech Conclave
2019, on “Technological Revolution that is shaping the future of finance

 The theme is based on Indian ecosystem and steps required to achieve the potential that the
sector offers through growth, employment and inclusion.

He shared some of the core issue in this area

 Fintech?

 All the financial institution from startups to established one, all the key player harnessing this
along the financial service value chain to provide efficient and differentiated experience to their
user.

 This will fundamentally transform the financial-landscape where consumers will get to choose
from a larger set of options at competitive prices and financial institutions could improve
efficiency through lower operational costs
FinTech Experience in India

 India ranked 2nd in terms of adoption, with rate of 52%.

 1218 fintech firms operate in india

 The Reserve Bank has over the years encouraged greater use of electronic payments so as to
achieve a “less-cash” society.

 The objective has been to provide a payment system that combines the attributes of safety,
security, enhanced convenience and accessibility, leveraging technological solutions that enable
faster processing.

 Banks have been the traditional gateway to payment services, with the fast pace of technological
changes, this domain is no longer the monopoly of banks.
EFFECTS OF FINTECH IN DIFFERENT CATEGORIES OF PAYMENTS

1. The NEFT system handled 195 crore transactions valued at around Rs.172 lakh crore in 2017-18 , the
substantial difference and impact of Fintech can be seen over last 5 years.

4.9 times in terms of volume 5.9 times in terms of value

2. The number of transactions through credit and debit payment instrument was 141
crore and 334 crore valued at 1.41 lakh crore, the total card payments, in volume
terms, stood at 52% of the total retail payments during 2017-18.

3. Alternative models of lending and capital raising are coming up and have potential
to change the dynamics of traditional lenders and the role of traditional
intermediaries like
a. Crowd –funding
b. peer-to-peer lending
 CONTD…

1. RBI has given permission to seven NBFCs which approve loans in pure digital format through mobile applications
and also ensure that they have at least one physical presence as well.

2. The introduction of Invoice trading which is nascent in India. It assists MSMEs which have problem in working
capital and cash flow due to delayed payments.

3. RBI has also set up Trade Receivables Discounting System where technology is leveraged for discounting bills and
invoices, three entities have been given authorization for his purpose.

4. The introduction of AA( Account Aggregators) in NBFCs is going to implement.

5. To enhance and for a better regulation of digital payments, the RBI has also appointed a five member committee
under the chairmanship of Shri Nandan Nilekani.
OPPORTUNITIES, RISK AND THE WAY FORWARD
DIGITAL ONBOARDING & FINANCIAL INCLUSION

Improving the Analysing risk

accessibility

Government linked Technology based

Aadhaar to DBT application

RegTech SupTech

Improving efficiency
 RBI encouraged banks to explore the possibility of establishing new alliances with FinTech firms
 To accelerate the agenda of financial inclusion through innovation
 It is essential that flow of investments to this sector is unimpeded to realise its full potential
 To create an ecosystem which promotes collaboration while carefully paying attention to the implications for
the macro economy
 To ensure development of Fintech and to protect the customers and to safeguard the interest of all the
stakeholders, we need to have appropriate regulatory and supervisory framework
 The Reserve Bank’s working group on Fintech and digital banking suggested “regulatory sandbox/innovation
hub”
 Regulatory sandbox would reduced time to launch innovative products at a lower cost
 CONCLUSION
 Fintech has the potential to reshape the financial services and financial inclusion landscape in India
 It can reduce costs and improve access and quality of financial services