FinTechs Expanding Formal Credit Access For MSMEs, Reaching Last-Mile Entrepreneurs: RBI Governor

Mumbai, Sept 9 (KNN) FinTech companies are helping bridge India’s MSME credit gap by extending formal, collateral-like credit to millions of small businesses that have historically remained outside traditional underwriting systems, RBI Governor Sanjay Malhotra said.

“This is credit for reaching the last mile of entrepreneurs, offering jobs and livelihoods across the country,” Malhotra said while addressing the inaugural session of the 7th Global Fintech Festival.

He said the Reserve Bank has consistently viewed FinTech as a valuable partner in building the financial system of the future, with technology transforming access to banking, payments and credit over the past decade, reported Businessline.

FinTech Driving Financial Inclusion

Malhotra said FinTech has taken banking from branches to the hands of citizens by enabling people across urban and rural India to transact, save and borrow through digital infrastructure such as UPI, Aadhaar Enabled Payment System (AePS) and the Jan Dhan ecosystem.

This has made financial inclusion an everyday reality for hundreds of millions of Indians by connecting diverse sections of the population to formal finance more quickly and affordably, he said.

FinTech has also improved customer experience and efficiency by reducing account-opening and payment-settlement times, lowering transaction costs, strengthening fraud detection through artificial intelligence (AI)-based analytics and enabling real-time supervision.

Cash Flow-Based Lending Boosting MSME Credit

The impact has been particularly visible in MSME credit delivery through cash flow-based lending, Account Aggregator frameworks and the Unified Lending Interface, Malhotra said.

He said the RBI’s regulatory sandbox, Reserve Bank Innovation Hub and continued engagement with startups, FinTech companies and other stakeholders reflect its approach of using open and constructive dialogue to improve policymaking.

The RBI has also encouraged self-regulation, supported digital public infrastructure and remained open to new ideas and players while promoting responsible innovation, he said.

Malhotra added that the central bank would continue working towards a financial system that is safer, more trustworthy, inclusive and efficient, while supporting economic growth and public welfare.

(KNN Bureau)