A 75-district digital bank network will foster financial inclusion in India
By Puja Sharma
Earlier this year, the finance minister of India, Nirmala Sitharaman in the FY22-23 union budget announcement gave special emphasis to digital banking and FinTech.
The 2022 Union Budget’s focus on FinTech and digital payments platforms and ecosystems is a testament to its commitment to realize its vision of an economically self-reliant nation and driving a less-cash economy. The initiation of 75 digital banks will be a landmark move that will provide a hybrid model for those who are still experimenting with digital banking and pushing digital transactions in India.
India’s public digital infrastructure, especially UPI has successfully demonstrated how to challenge established incumbents. As pointed out in the opening section, UPI transactions measured have surpassed ₹4 trillion in value. Aadhaar authentications have passed 55 trillion. Finally, India is at the cusp of operationalizing its Open banking framework. These indices demonstrate India has the technology stack to fully facilitate DBs. Creating a blueprint for digital banking regulatory framework & policy offers India the opportunity to cement her position as the global leader in Fintech at the same time as solving the several public policy challenges it faces.
Rajesh Mirjankar, MD and CEO of Kiya.ai, a digital solution provider said, “India’s digital stack for payments is now available on smart and feature phones. The next frontier on inclusion will be using DBUs for accessing financial services without the need for a bank branch. With the advent of 5G and IoT the concept of DBUs will be more potent in providing financial inclusion for Bharat with Video KYC, Scanning of documents, Printing statements, and secure banking with Aadhaar token-based authentication and other tokenization based methods.”
Digital operations in our country have risen exponentially over the last few years because of the increasing internet and smartphone penetration, with the pandemic acting as a catalyst. Several consecutive steps by the government over the past few months have been in acknowledgment of the role of digital technology and FinTech players, in catering to the underserved regions of the country.
“It is heartening to hear PM Modi’s initiative dedicating 75 Digital Banking Units to the nation on 75 years of Indian Independence. We welcome this move, which has the future firmly in focus, and aims at offering a level playing field for existing and upcoming entities while avoiding any regulatory or policy arbitrage,” said Dilip Modi, Founder of Spice Money, a FinTech firm providing financial services for the under-served section of society.
“We have been fortunate to be a part of this journey, providing customised solutions to the hinterlands of India, to cater to the unique needs of these regions. This will further help to get a robust banking infrastructure in the rural areas that contribute greatly to the country’s GDP and where a majority of the population resides.” Modi added.
Not only will this initiative aid in streamlining efforts towards bringing this significant part of India’s underserved population to the fore of the formal banking sector, but also encourage more players to enter the market which will benefit the citizens of Bharat, and ultimately help them achieve financial freedom.
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