The Centre is committed to enhance higher credit and wants to push as much credit as possible in the economy, M Nagaraju, Secretary, Department of Financial Services (DFS), said on Tuesday. 

Towards this end, public sector banks (PSBs) will come up with several new products in the next 3-4 months to bolster the credit flow in the system.

“We have huge number of young people … youth who require credit. In the next 3-4 months, we will come up with several new products from the PSBs. Government is also going to give credit guarantee,” Nagaraju said at the CII Financial Inclusion and Fintech Summit in the capital. 

He highlighted that Finance Minister Nirmala Sitharaman has already announced that MSMEs don’t need to give banks any collaterals or guarantees for taking credit up to ₹100 crore. 

The Centre and Public Sector Banks (PSBs) have already sanctioned ₹31 lakh crore collateral-free Mudra loans to MSMEs and more than 50 percent of the borrowers are women, Nagaraju said about the successful penetration of the scheme.

Fintech Sector 

Nagaraju asserted that there is no limit to fintech innovation and imagination and that, “Many fintechs are doing very well. Government has been working very closely with fintech industry for promoting financial inclusion.”

Currently, India’s fintech sector is the third largest (besides the US and the UK) in the world. There are 13,000 fintech companies functioning in the country with investment of $ 33 billion in India, he added.

“Unlike in Silicon Valley or London, our fintechs are spread across all sectors from agriculture, payment, settlement, investment advisory, wealth management to analytics, cloud, scholarship, disaster management and analytics,” he said.

He said that government has also taken up several initiatives to reduce compliance burden for companies.

“While fintech is expanding and there is lot of immense potential and benefit to country, we should also address some challenges that come with them, ” he noted.

Digital growth has thrown certain challenges including governance, regulatory and statutory compliances, customer protection and fair practices, he said. “It is essential to strike a balance between the fintech innovation and timely regulatory compliance and responses. It is also important that innovation does not outpace the necessary safeguards required to comply the guidelines,” Nagaraju added.

Cybersecurity, data privacy, identity theft, digital financial frauds and financial literacy are some of the areas that require the attention of the fintech industry, he said.

Nagaraju later parried a question from reporters on whether government was looking to introduce much awaited Insurance (amendment) Bill in the ongoing Winter Session of Parliament.