Financial Inclusion Current Affairs - 2019
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NITI Aayog had organised a day-long FinTech Conclave 2019 in New Delhi. The objective of the conclave was to shape India’s continued ascendancy in FinTech, build the narrative for future strategy and policy efforts, and to deliberate steps for comprehensive financial inclusion.
The conclave looked into various dimensions of the future of the FinTech, particularly the areas of:
- Digital Onboarding of Customers and Merchants for Financial Inclusion.
- Building Financial Products for Bharat.
- Emerging Areas of FinTech.
- Fast-tracking investment in FinTech industry.
- Financial Inclusion of MSMEs.
FinTech in India
Fintech or financial technology companies use technology to provide financial services such as payments, peer-to-peer lending and crowdfunding, among others.
India is one of the fastest growing fintech markets globally and it has been projected that $1 trillion, or 60% of retail and SME (small and medium-sized enterprises) credit, will be digitally disbursed by 2029.
The Indian fintech ecosystem is the third largest in the world and attracts nearly $6 billion in investments since 2014.
Reserve Bank of India (RBI) is encouraging banks to explore the possibility of establishing new alliances with fintech firms to further drive the agenda of financial inclusion through innovation.
The minutes of meeting which had approved the demonetisation of Rs 500 and Rs 1000 currency notes has been revealed through RTI. The government had contested that demonetisation would help curb black money and a steep rise in Rs 500 and Rs 1,000 notes; check the circulation of fake currency and promote e-payments and financial inclusion.
Observations made by RBI
- RBI Directors had contested the government’s claim about curbing black money by highlighting that most of the black money is held not in cash but in the form of real sector assets such as gold or real estate and this move would not have a material impact on the assets.
- RBI Directors refuted the government’s argument about the growth in high denomination notes being much faster than the pace of economic expansion, by reasoning that when adjusted for inflation, the difference may not be so stark.
- RBI has stated that even though the incidence of counterfeiting is a concern, Rs 400 crore as a percentage of the total quantum of currency in circulation is not very significant.
Despite these reservations and disagreements, the RBI board had approved the demonetisation in larger public interest as it provided an opportunity to promote financial inclusion and digital payments. Further the government had assured the RBI directors that it would take measures to contain the use of cash and promote financial inclusion and electronic modes of payment.