Draft bill for setting up NFIR almost complete after extensive consultation process: DEA secretary Ajay Seth

New Delhi: The draft bill for setting up a National Financial Information Registry (NFIR) is almost complete after extensive consultation processes, with the government expecting to set up the registry soon, secretary of the Department of Economic Affairs Ajay Seth said on Tuesday.

"We expect that early set up of the registry post-enactment will help in bridging or filling a critical gap in credit rating mechanism," Seth said while addressing the CII Financing 3.0 Summit.

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In her 2023 budget speech, finance minister Nirmala Sithraman announced that the government will set up a National Financial Information Registry to serve as a central repository of financial and ancillary information.

The NFIR aims to facilitate the efficient flow of credit, promote financial inclusion, and foster financial stability.

Meanwhile, Seth said the government is looking at an economic growth of 7% (GDP) for the next seven to eight years, and sustaining the growth momentum thereafter.

"And that requires reimagining our financial sector," he said.

Growth estimates revised

Recently, global agencies have upwardly revised India's GDP growth estimates for FY25 citing the government's sustained capex push on infrastructure, better-than-expected monsoons and agricultural output, and pick up in private consumption for its upgrade.

The World Bank has revised its FY25 growth forecast for India to 7% from its earlier estimate of 6.6%, while the International Monetary Fund (IMF) has upgraded India's GDP growth in the ongoing fiscal (FY2025) by 20 basis points to 7% in July.

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Last month, rating agency Moody's upwardly revised India's economic growth forecast for 2024 to 7.2% and 6.6% in 2025, up from its earlier estimates of 6.8% and 6.4%, respectively, for the ongoing and the next calendar year, citing strong broad-based growth for the revision.

Addressing the CII Financing 3.0 Summit, Seth said key themes relevant for India to work on to steadily maintain high growth include getting higher contributions from the global financial sector, achieving financial inclusiveness, ensuring adequate financial capital for fuelling growth, regulations designed in a way to balance risk and innovation, being future-ready against cyber security data protection woes using artificial intelligence, and nurturing talent.

Room for improvement

Seth pointed out that the Indian economy, despite reporting a high rate of growth, still has room for improvement.

"Today, almost 70% of our population has a bank account. But when we look at other metrics, say insurance, what is the insurance penetration in our country? It has increased but is still at about 4.2% compared with some of the advanced economies," he said.

"Advanced economies have an insurance penetration of over 10% in terms of population covered," he added.

Seth said there's potential for raising more capital from Initial Public Offerings (IPOs) and increasing annual inflow into the mutual funds market.

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"When we look at how much money gets raised through IPO in a year, last year's data shows it has increased substantially. But it is still about 0.2% of the GDP," he said.

While the mutual fund market is a huge success story with over ₹60 trillion of assets under management, the annual inflow is barely 0.6% of the GDP, at about ₹2 trillion, he added.

Seth said the agenda for the future should be the need for deepening and widening of the bond market.

"Over 80% of the issuances are rated. This means that a very vast segment of economic players are unable to tap the bond market," he said.

"Much work needs to be done in terms of credit rating and developing the secondary market," he added.