Niti Aayog has proposed setting up full-stack digital banks that rely on the Internet and other proximate channels to bridge the credit gap that MSMEs face.
NITI Aayog’s vice chairman has released a thorough report enlisting the recommendations. The report primarily addresses prevailing gaps and the niches that remain underreserved in licensing digital banks.
What does the report recommend?
1. Issue of a restricted digital bank license
2. Enlistment of the regulatory framework by the Reserve Bank of India (RBI)
3. Issue of a contingent on the satisfactory performance of the bank license
Digital Banks – way forward to financial inclusion
With the recent stride India has made in furthering financial inclusion – there are around more than 63 million MSMEs that contribute 30% to the GDP.
Over the past few years, massive steps have been taken to revolutionize the digital payment sector. UPI, which had an extraordinary adoption, recorded more than 4.2 Billion transactions.
A whole of India is leapfrogging in the race of financial inclusion. And when we are leveraging technology at its best, why should MSMEs be left behind?
The current credit gap constraints demand an effective leveraging of technology to cater to the needs and bring about the much-needed financial fold.
So, while the reports have been sent to the wider stakeholders’ consultations, let us hope that the issue is addressed and that the officials find a way to fix it soon.