DFS Secretary Calls On Fintechs To Aid In Developing Credit Assessment Model For MSMEs

ENA MSME 2024-08-08 15:53:40 New Delhi, Aug 8 (KNN) Vivek Joshi, Secretary, Department of Financial Services (DFS), has called upon fintech companies to assist public sector banks (PSBs) in creating a new credit assessment model for micro, small, and medium enterprises (MSMEs) based on their digital footprints. Speaking at a fintech conference organised by the industry body FICCI, Joshi emphasised the need for innovative approaches to credit evaluation that go beyond traditional reliance on balance sheets and returns. In the FY25 Budget, Finance Minister Nirmala Sitharaman had urged PSBs to lead in developing this novel credit assessment model. The proposed model would focus on the digital activities of MSMEs, especially micro and nano enterprises, rather than conventional asset or turnover criteria. Sitharaman highlighted that this approach would be a significant improvement, particularly for MSMEs lacking a formal accounting system. Joshi underscored the pivotal role fintech companies can play in enhancing banks' digital lending capabilities. I urge fintechs to collaborate with banks in creating and implementing this credit assessment model, he said. He pointed out that fintechs have transformed the financial sector with innovative solutions and should work closely with banks to understand and address their specific challenges. Addressing the issue of collaboration, Joshi noted that fintechs often develop solutions independently before approaching banks, which can lead to a mismatch in addressing the banking system's challenges. Since fintechs are not working closely with banks, they may have limited information about the challenges the banking system faces, he stated. He further explained, Therefore, we should work towards having fintechs address problems identified by banks. Many banks have started empaneling startups for this purpose, and it would be highly beneficial to provide them with problems and seek tailored solutions. Joshi also highlighted the importance of balancing innovation with regulatory compliance. He acknowledged the immense potential of fintech in transforming the financial sector but also noted the unique challenges posed by digital technology, including governance issues, regulatory and statutory compliance, consumer protection, and fair practices. It is essential to balance fintech innovation with timely regulatory responses, he concluded. (KNN Bureau) 38904 https://knnindia.co.in/news/newsdetails/msme/dfs-secretary-calls-on-fintechs-to-aid-in-developing-credit-assessment-model-for-msmes 2024-08-08 15:53:40 knnindia.co.in DFS Secretary Calls On Fintechs To Aid In Developing Credit Assessment Model For MSMEs