Fintech Driving The Innovation Ecosystem In India: Rajeev Chandrasekhar

Speaking at the Fintech Festival India, the Minister of State for Electronics and Information Technology, Skill Development and Entrepreneurship Rajeev Chandrasekhar said that India is among the fastest growing fintech ecosystems in the world, driving innovation in the country.

According to government-stated figures, there are 6,636 fintech startups in India, 22 of which are unicorns. Chandrasekhar added that the Indian fintech industry’s market size is $31 Bn in 2021 and has the highest fintech adoption rate in the world at 87%.

According to an Inc42 report, however, India’s total fintech opportunity will be worth $1.3 Tn by 2025.

The MoS added that India’s fintech ecosystem has helped rebuild the trust between the citizens and the government and restore faith in democracy.

He also added that with fintech, the scope of corruption and leaks is eliminated and the beneficiaries of any government scheme that includes remittances get the amount straight in their bank accounts.

“There was a time when it was openly admitted that out of every 100 rupees disbursed by the Government from Delhi, only INR 15 reached the beneficiary, and the rest of the money got mysteriously siphoned off. But today, there is no leak or scope for corruption as the beneficiaries get their amounts due straight in their Jan Dhan accounts and are empowered financially,” Chandrasekhar said.

Driving Innovation In A Tough Regulatory Environment

The Minister’s comments come as the fintech ecosystem is having a bit of a tussle with the government over new regulations.

In June, the RBI passed a notification saying that entities without a banking license can’t load credit lines onto the prepaid payment instruments (PPIs), putting India’s fast-growing credit cards and prepaid cards business in a state of panic. 

While startups and industry bodies have asked the government for a six-month period to become compliant with the notification, many fintech startups have either stopped their prepaid card services or have changed their business models altogether.

Just yesterday, the RBI governor Shaktikanta Das provided an update on the incoming guidelines to regulate digital lending in the country.

The governor said that the regulations should be out soon, stating that the RBI wants to maintain a balance between innovation and financial stability. The guidelines will impact the $270 Mn digital lending segment in the country.

Further, within fintech, the issues with cryptocurrency are still unresolved. The government has taken a rather ambiguous approach to the whole situation. Days ago, Union Finance Minister Nirmala Sitharaman said that the RBI wants to ban all crypto in India. She added that the government is of the opinion that cryptocurrencies can be regulated.

All of these recent developments have put the fintech ecosystem in a rather tight regulatory space, with little room to manoeuvre to innovate.