A paperless digital bridge with the expected changes in mandates and regulatory frameworks, could very soon remove physical interaction with banks altogether
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Digital India - shutterstock_193919333
The demonetisation drive led to digital payments picking up at an alarming rate in the country. But why should digital outlook be restricted to just payments and retail transactions? Digital mobility in finance, in fact, needs to spread across platforms that include lending, investments and social security.
The latest World Bank 2018 Global Economics Prospect, despite demonetisation and Goods and Services Tax (GST), has projected the country’s growth rate to rise to 7.3 per cent in 2018 and 7.5 per cent in the next two years. It said that digitisation in finance undertaken as an ambitious programme by the government, is key to the enormous growth potential of India, compared to other Emerging Economies. And among other avenues, digitisation in finance is the greatest need of the hour.
To add to this, India is poised to become the second largest smartphone country in 2018 as per a study by US-based media agency Zenith, when the country will have 530 million smartphone users. The growth of fintech is expected to pair with this growth of Internet users and e-commerce in India and allow marketplaces like us to foster and reach out to as many customers as possible.
While banks and NBFCs will play the driving force in the dispensation and collection of funds, marketplaces like ours have the best opportunity to boost this digital drive. Assisting banks and financial institutions with e-finance will not only provide the means to efficiently manage hard costs of communication, but also productively control the communication, including preventing alterations to the information. This would also ensure that there is effectively documented communication history, which itself will accelerate the process.
Many would see us competing with established financial institutions, but in the long-run its more of enabling those very institutions and partnering with them into creating an integrated, easily accessible, democratised financial system that could bring millions of more Indians within the ambit of formal banking.
The eKYC pilot run can be considered a turning point in initiating the digital drive. To add to it Aadhaar and its linkage to all financial and social schemes, will aid this paperless movement. But both of these need to go hand in hand with other platforms as e-Sign, DigiLocker, and e-NACH. While e-KYC has already been adopted by most stakeholders, e-Sign still needs to be adopted by most parties, for which effective changes are also required in the IT Act. DigiLocker is a relatively new concept, where 1 GB of storage space is offered to users by the government to store identification card issued by government agencies, education certificates, PAN cards, driving licence, vehicle ownership documents and some other documents. The concept is a much need one for remote areas, as it can get tedious to carry around the same set of documents from point to point in anticipation of loan approvals. Some private banks have already started integrating the service with their Net banking, but more financial players need to adopt the platform for a mass adoption.
As for e-NACH, although smaller amounts can be disbursed digitally, the approval of an insurance or loan disbursal process still requires wet signatures. Giving mandates in future can be made completely paperless with the introduction of either e-signed mandates or an e-mandate revocable only with the consent of the lender. e-NACH can help banks streamline the process of on-boarding repayment mandates, and although it’s reach is quite limited as of now, hopefully all financial institutions in future should be integrated with it.
A paperless digital bridge with the expected changes in mandates and regulatory frameworks, could very soon remove physical interaction with banks altogether. When that happens we can call ourselves an all-inclusive digital economy.
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