New modes of lending, fund raising on cards

New Delhi: In a bid to change the market dynamics of the banking and financial sectors, the Reserve Bank of India (RBI) will soon come up with alternative models of lending and capital raising for the sectors.

In this context, Governor Shaktikanta Das said he would meet the heads of payments bank this week. “I will be meeting heads of payments banks later this week to understand their issues. Though the spheres of banking technology and trade finance have been commendable, alternative models of lending and capital raising are coming up and have the potential to change the market dynamics of traditional lenders and the role of traditional intermediaries.”

“RBI has undertaken a detailed consultation process with them and discussed issues. I have already started a process of very active engagement with stakeholders and players like banks, cooperative lenders, NBFCs and various other stakeholders who are supposed to play these kind of roles,” Das said while speaking at an event organised by NITI Aayog in the capital.

Das on Monday also met Finance Minister Arun Jaitely, and is learnt to have discussed the current economic situation, ahead of the first bi-monthly monetary policy for 2019-20.

As a new layer in the banking system, as many as seven payments banks have commenced operations after the first set of licences was issued in 2015.

Das has mentioned the emergence of alternative fund raising and lending models like crowd funding and peer-to-peer (P2P) lending in the country.

“Crowd-funding, which entails raising external finance from a large group of investors, is at a very nascent stage in India,” he said. “The peer-to-peer lending, for which RBI has issued Master Direction in October 2017, has the potential to improve access to finance for small and medium enterprises. Eleven entities have been licensed to operate P2P platform,” he added.

Das further said the RBI has granted licences and permitted seven purely digital loan companies (NBFCs) to commence operations. “Although they are purely digital players operating through mobile applications, we have ensured that they have at least one physical presence for customers to reach out to in case of need,” he said.

Appreciating the role of fintech companies, the governor said these can widen financial inclusion in India by reducing costs and making formal financial services accessible to a large number of people.

He said there has been a focused effort to develop a proper national payments infrastructure and technology platforms like Immediate Payments Service, Unified Payments Interface, Bharat Interface for Money, Bharat Bill Pay System or Aadhaar-enabled Payment System.

“This has changed the retail payments scenario of the country. The total volume of retail electronic payments witnessed about nine-fold increase over the last five years,” he added.