Government should support fintechs amid covid crisis: Ficci-PWC report
- Among a list of other policy and regulation suggestions, the report urged the central bank to also mandate the central KYC processes for all lenders at the earliest and simplify prescriptive requirements
Bengaluru/New Delhi: The government should liaise with financial technology firms for distribution of financial benefits and relief measures amid the covid-19 crisis, said a report by Federation of Indian Chambers of Commerce and Industry (Ficci) and PWC.
“The need for digital awareness and presence is prominently recognised by individuals, businesses and governments alike. Fintechs can act as enablers for the banking and financial sector, playing a crucial role in ubiquity and adoption of digital financial services. A few measures related to policy and regulation that can support the Fintech sector during the ongoing crisis,” the report said.
It also highlighted the need to further promote digital payments and banking, amid fears that use of cash may spread covid-19.
"In line with this, the government is advised to reinstate subsidies for digital payments for transactions below ₹2,000 immediately,” the report said.
Among a list of other policy and regulation suggestions, the report urged the central bank to also mandate the central KYC processes for all lenders at the earliest and simplify prescriptive requirements, such as the presence of a bank officer on the other side during an interaction, while encouraging the development of collaborative solutions for video KYC between banks and fintechs, it said.
Earlier the Reserve Bank of India (RBI), had announced a moratorium on term loan repayments for six months and a similar moratorium for interest payments on working capital loans for three months.
However, the benefits of the moratorium didn't apply to digital lending firms and their borrowers. In line with this the report also recommended to the RBI for a similar relief.
Digital Lenders Association of India (DLAI) had written to the government and RBI in March for extension of this relief.
Speaking at the webinar ‘Future of Fintech in light of COVID-19’, organised by Ficci, industry participants said the covid-19 crisis has brought upon a consumer shift towards ‘self-serve’, with digitisation of operations assisting to their recovery.
“Many customers are now doing a lot on their own (including opening accounts and making payments). If this behaviour sticks to this ‘Do-it-yourself’ behaviour, a lot of costs around providing services can be reduced and also equip consumers with more options owing to digital channels,“ said Sayali Karanjkar, co-founder of PaySense, a digital lending platform.
Karanjkar also adds that the pandemic has also forced large-scale banks and non-bank lenders to digitise their backend operations and look at building fintech-like capabilities internally.
Digital lending companies in India which were deeply impacted by the covid-19 crisis and saw approval rates of new loans fall by 90% are now trying to get back to their feet.
“Starting the second week of June, we are seeing digital lenders trying to get back, while opting for a more conservative approach, similar to that of the 2008-financial crisis. The focus has moved to individuals with better credit history, who are working with large corporations and have lesser chances of losing their jobs,” Naveen Kukreja chief executive officer (CEO) and co-founder of Paisabazaar said.
Kukreja said that it is up to the large banks now on how they change their processes around methods of e-KYC and video KYC for digital adoption.
"The lockdown brought upon digital awareness in Tier 2 and 3 geographies as well, with bill payments through digital channels seeing a 93% increase overall. This is in spite of Tier 2 and 3 customers preferring to pay bills offline through kirana shops etc. which have now moved to digital methods of payments," added Harshil Mathur, co-founder and CEO of Razorpay, a payment gateway.
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First Published:24 Jun 2020, 06:51 PM IST
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