Indian regulators can perhaps establish “clear and adaptable” regulatory framework for fintechs which will accommodate evolving digital technologies and encourage innovation at the same time, State Bank of India (SBI) chairman Dinesh Khara said at a fireside conversation at the SME Finance Forum event here today.
Khara said fintech sandbox experiment by regulator can be encouraged more as it has allowed several businesses to test products in a very controlled environment while simultaneously reducing the regulatory burden. “Regulators have creative and constructive roles to play and also they can lead the industry to a much more secure path,” he said.
Over the last decade, Khara says there has been significant improvement in the digital ecosystem, especially in the fields of data collection, authentication of user identity, transactions, e-commerce and online marketplaces. The evolution has brought a shift in the way SBI underwrites loans. The invoice financing platform, for one, has made “life easier” for lenders, the chairman said, adding that credit scoring has also become easier with the help of evolving digital infrastructure.
Khara said SBI’s Yono app, which initially started for retail customers, now has a Yono business feature which helps delivering credit faster and helps in generating significant amount of supply chain finance, whether it be income tax, invoice, e-bank guarantees, among others.
Six months back, SBI also stated offering digital pre-approved business loans and the bank is now using AI-based tools for newer product launches. SBI has also come out with another platform where small and medium enterprises can showcase their products.
Meanwhile, Federal Bank ED Shalini Warrier said that while digital lending is easier for individual retail customers, for SMEs banks still have a long way to go. Federal Bank has an insta loan self-serving platform for SMEs and it enables the bank to pull out GST data, income tax archives, run the data through scoring engines and accordingly grant in-principle approval for term loans.
The next stage, however, will include not just giving in-principle approval for loans but also taking collateral and renewals digitally. Warrier emphasised that though digital offerings have improved significantly, some customers need to feel a better human connect with the lending institution. Accordingly, the bank will open 100 branches in the current fiscal, she said.