Acknowledging a credit gap, Financial Services secretary M Nagaraju said on Tuesday that public sector banks (PSBs) will unveil new products in the next three to four months, to improve credit growth, including for micro and small medium enterprises (MSMEs).
“We are committed to enhancing (credit flows), and we want to push as much credit as possible because we have a huge number of young people,” Nagaraju said addressing the Financial Inclusion and Fintech Summit organised by industry body CII here.
The government has taken several steps in the latest budget including a new credit assessment model for MSMEs based on digital footprints and cash flows. This is expected to be a significant improvement over the traditional assessment of credit eligibility based only on asset or turnover criteria. That will also increase coverage of MSMEs without a formal accounting system.
Though the banking sector is robust, Nagaraju said rising digital frauds are posing a risk to financial sector stability, and banks should focus on addressing this challenge. Both digital innovations and financial literacy will help mitigate this, the official added.
Speaking on the sidelines of the event, Nagaraju also said the Banking Amendment Bill tabled in Parliament during the monsoon session will likely be moved in the ongoing winter session.
The amendments are aimed at bringing changes to banking regulations, including redefining substantial interest for directors, increasing the number of nominees for bank deposits and changing compliance reporting dates.
Speaking on Fintech, he said India is the third largest country in terms of startups, and about 13,000 such entities are working in the space.
The government remains committed to the goal of financial inclusion and it is working closely with the fintech industry to attain greater inclusivity, especially in under-penetrated areas.
“The government is making a lot of efforts to foster ease of doing business and reduce compliance burden for the Fintech companies,” he noted.
He underscored the government’s continuous endeavour to provide a facilitating ecosystem to the fintech industry, including robust digital infrastructure and schemes like PM Suraksha Bima Yojana and Atal Pension Yojana, which could bring huge opportunities for the industry.
“A fine balance is required between fostering innovation and protecting the regulatory system’s integrity,” he cautioned.