SUMMARY
India is one of the fastest growing fintech markets in the world, had a size of $31 Bn at the end of 2021: Nageswaran
The focus now is on how the combination of technology and finance can enable access to finance and opportunities: CEA Nageswaran
The next wave in the fintech sector could be lending to MSMEs using account aggregator, UPI and OCEN: Chief Economic Advisor
Chief Economic Advisor (CEA) V. Anantha Nageswaran expects India’s total fintech market to soar 32X to $1 Tn by 2030.
Terming India as one of the fastest growing fintech markets in the world, Nageswaran said that the country’s fintech ecosystem had a market size of $31 Bn at the end of 2021 and is bound to grow manifold.
He made the comments while speaking at the Global Fintech Fest 2022 organised in Mumbai. The event saw the country’s top political leaders, RBI officials, bureaucrats, and industry veterans in attendance.
A report by Inc42 has projected the country’s total addressable fintech market to grow to $1.3 Tn by 2025.
“A major shift towards a more equitable distribution of investment across sectors including insurtechs, wealthtechs, etc, has started taking place. We are talking about bridging the digital divide and the economic divide. Therefore the focus now is on how the combination of technology and finance is enabling access to finance and access to opportunities,” Nageswaran said.
Touting the government’s initiatives, the CEA said that lending to MSMEs via initiatives such as account aggregator framework, UPI and Open Credit Enablement Network (OCEN) is likely the ‘next wave in the fintech ocean’.
OCEN is part of the larger open financial protocol devised by the government. It is part of the frontier layer of the India Stack and deploys national health stack, Aadhaar and account aggregator framework to develop UPI for credit.
The account aggregator framework enables companies and startups to access financial data of the customer and offer services accordingly. Under the financial data framework, users have complete control over their data which cannot be shared without the consent of the individual.
Addressing the session, Nageswaran also said that the government is looking to leverage its plethora of digital services to focus on ‘digital financial empowerment.’
“The government is now pivoting from digital financial inclusion to digital financial empowerment. This is being done through Jan Dhan 2.0, strong gender focus, PM SVANidhi Scheme, eKYC and digital onboarding and protection of digital customers,” noted Nageswaran.
On the barriers to growing digital payments, National Payments Corporation of India (NPCI) CEO Praveena Rai said that the agency is looking to address issues such as affordability, access to identity, and literacy as it goes deeper and broader into its market and user base.
Earlier in the day, PM Modi, in a statement, also said that a focus on innovation for inclusion has led to the country’s rise in the global fintech startup space. At the same event, Finance Minister Nirmala Sitharaman said that there is a need for building trust between the government and fintech players.
Meanwhile, Reserve Bank of India (RBI) Governor Shaktikanta Das called on the fintech ecosystem to pay due attention to governance, regulatory compliance, risk mitigation and other frameworks.
The third edition of the event has been organised in collaboration with the Ministry of Finance, RBI, International Financial Services Centres Authority (IFSCA), NPCI, the Payments Council of India (PCI) and the Fintech Convergence Council (FCC).
