Shri Shaktikanta Das, Governor of the Reserve Bank of India, touched on multiple topics pertaining to Fintech at a global conference entitled Digital Public Infrastructure and Emerging Technologies. Digital Public Infrastructure (DPI) and Emerging Technologies are expected to shape the futures of all economies, said the official.
Speaking about Fintech, the Governor said that India has crafted a strategy focused on three dimensions: digital identity, bank accounts, and processing infrastructure. This includes payments, digital money, and more.
As a good portion of India is underbanked, there has been a push to broaden access to financial services. The Jan Dhan scheme, or providing Basic Savings Bank Deposit (BSBD) Accounts, is said to have enabled more than 500 million accounts. Part of this project seeks to ensure affordable mobile phones and access to the internet. In May, the “mobile teledensity” was reported at 83%.
Real-time payments, first used by banks and now third parties, are said to have emerged as a “robust, cost-effective and portable retail payment system.”
Efforts to foster “frictionless credit” under the Unified Lending Interface (ULI) have reportedly cut down on the time for appraisal, including for small rural borrowers.
Launched in 2022, the RBI reports that its Central Bank Digital Currency (CBDC) pilot now has over 5 million users alongside 16 partner banks.
He explained the benefits of the digital rupee:
“While the retail pilot started with initial use case of payments, currently both the offline and programmability functionalities are also being tested. The programmability feature of CBDC could serve as a key enabler for financial inclusion by ensuring delivery of funds to the targeted user. Let me illustrate this by an actual pilot that was launched recently. Tenant farmers often find it difficult to access agricultural credit for inputs and raw materials as they do not have the land title to submit to the banks. However, programming the end use for purchase of agricultural inputs can give the required comfort to banks and thus establish the identity of a farmer not through his land holding but through the end use of funds being disbursed. Yet another path breaking use case is farmers getting purpose bound money through programmable CBDC for generation of carbon credits. Other new use cases aimed at testing features such as anonymity and offline availability are proposed to be rolled out gradually.”
The Governor added that there is no need to rush the rollout of a CBDC system-wide until the impact of digital money is better understood.
Regarding Artificial Intelligence (AI), the Governor said it has many benefits for financial services but also serious challenges.
“Data privacy concerns arise from handling vast volumes of personal information. Ethical AI governance is essential to ensure fairness and prevention of bias. Financial institutions must ensure that AI models are explainable.”
As India is one of the largest economies in the world, developing rapidly, advancements in Fintech can help boost economic growth. Innovation in financial services are key to boosting productivity and allowing the population to access advanced financial services. The Governor believes that any “solution that works well in India has the potential to be customized to the unique requirements of any other country.”
