Key Highlights:
~ NPCI (National Payments Corporation of India) has seen a spike in transactions through e-payments after demonetization
~ DBT(Direct Benefits Transfer) mission has designed a single platform through which around 500 central government program can be rolled out
~ Out of the 750 million, 45 million cards are used for digital transactions due to poor acceptance infrastructure
Dilip Asbe-NPCI, Krishna Dharamrajan-Centre for Digital FI, Greg Chan-CGAPwith other speakers during the discussion on IndiaStack
SK Gupta- NPCI, Madhur deora -Paytm and Amitabh Tiwari-Mastercard with other speakers during the discussion on Cashless Ecosystem
New Delhi, 6th December 2016: After an exhilarating day of discussion on Day 1, the Inclusive Finance India summit proceeded to the second day with a promise of more engaging sessions. The day started with associated events pertaining to financing for water and sanitation organized by India Sanitation Coalition and Water.org. The panelists discussed institutional and behavioural issues and challenges in Financing water and sanitation loan products.
The session on the role of microfinance on quality of life products discussed, the potential of Panelists discussed microfinance for providing specialized financing for improved access to improving quality of life through water, sanitation, energy for lighting, cooking etc.
The session on behavioral issues on uptake of digital financial services discussed how financial service providers improve the design and effectiveness of products and services—from loan repayment to usage of savings accounts to uptake of the products and services themselves.
In the next session, the role of IndiaStack and APIs was discussed. The India Stack collectively covers specific APIs that allow governments and businesses to utilize and deliver key services to citizens of the country. These APIs have been developed by various organizations over the last 7 years, starting with Aadhaar, which launched an authentication API in 2010.
The session was started by Mr. Greg Chen, Lead Asia, CGAP by flouting questions about what is IndiaStack and its importance in gradually evolving Financial Inclusion in India.
Mr. Sahil Kini, Volunteer of ISpirit explained that putting technology pieces together and integrating them to achieve a larger goal can be called as IndiaStack. He further explained that a layered version of APIs for each step like validation of KYCs, digital signature on forms, utilization of digital locker through unique resource identifier can be designed and integrated for public good.
Mr. Dilip Asbe, COO of National Payments Corporation of India said that the NPCI has seen a spike in transactions through e-payments after demonetization and they are committed to speed up the transaction and payment settlement process.
Role of Direct Benefit Transfer (DBT) for the utilization of all government schemes and helping them to achieve last mile delivery more efficiently is explained by Mr. Peeyush Kumar, Joint Secretary, DBT Mission, Govt. of India. He said that the DBT mission has designed a single platform through which around 500 central government program can be rolled out.
Mr. Krishnan Dharmarajan, Executive Director, Centre for Digital Financial Inclusion said, “People have seen the impact of Aadhar, which is coupled with their mobile and bank accounts.” He added that it is important that technology should be capable of tracking benefits of programs and able to provide whether outcome is as it was expected.
The Business Correspondent model was also discussed which was introduced by RBI in 2006. While the model has been able to provide access to the last mile to some extent, most of the bank agents belong to the local community having limited educational qualification and are not fully equipped to responsibly deliver services to low-income vulnerable groups leading to distress.
Mr. Ajay Desai, Senior President and Chief financial inclusion officer, Yes Bank, discussed on the credit led BC model and the liability led BC model, emphasizing that the challenges in the credit led BC channel are higher.
The session on insurance commenced with opening comments from Mr. Amit Arora, Consultant, The World Bank by raising question whether mandate is necessary for the micro insurance in current perspective.
Mr. Sanjeev Mantri, Executive Director, ICICI Lombard General Insurance Co. Ltd. said that at present many schemes are focusing only on number of subscriber for the insurance. He gave the example of PMJJBY where government is providing a subsidised insurance to people; still insurance penetration has not increased.
Mr. Khalid Ahmad, Head Product Management, PNB MetLife India Insurance Company Limited said “while designing an insurance product, it is required to check whether the amount and coverage period is suitable for which the product is offered. Also in most of the cases, benefits were not getting transferred to the end users due to complicated claim settlement process and an appropriate mechanism is required for the same”
The session then discussed the importance of data privacy in the context of usage of data for assessment of credit worthiness. Mr. Richard Eldridge, Founder & CEO, Lenddo emphasized on the need to use vast amount of non-traditional data points, which can help the lenders in analyzing and undertaking lending decisions.
Mr. Jiji Mammen, Chief Executive Officer, MUDRA Bank, suggested that currently the data being used by the funders is the credit history data and in order to include more clients to the gambit of financing it is required to assess ways which can be utilized for analyzing the credit worthiness of the borrowers.
Mr Sarat Yadav of ICICI Bank informed the audience that digitization had helped to reduce the turnaround time to provide the loans to the customers.
The fourth Plenary of the summit deliberated on the implication of demonetization on the role of promoting less cash ecosystem. Mr SK Gupta of NPCI said that NPCI has created diversified platforms for facilitating digital payments through different means like CARD, mobile and Aadhaar and all the banks are on-boarded on the products. Complete ecosystem availability exists in the country. There are, however, constraints which have resulted in inadequate usage of digital means for transactions. This has resulted in the fact that out of the 750 million 45 million cards have been used for digital transactions. This is mainly account of the fact that acceptance infrastructure was missing.
Mr Madhur Deora of Paytm said that incredible support from the regulators at this time is necessary to push for cashless. A billion Adhaar cards are there and a billion mobile phones are also there in the country. The key to increasing usage will be ensure that payments have to be accepted everywhere, user interface has to simple, and products should be relevant to the customers and the customers need to have trust. At the same time the back end needs to be sophisticated enough to ensure that the system is secure enough.
Mr Amitabh Tiwari of MasterCard emphasized that if any payment system has to become sustainable there should be adequate revenue for the participants. Creating access points and making people familiar are critical steps to ensure wider usage.
H Srikrishnan, CEO of Geo Payment Bank said that if cost of transactions can be brought down, Microsavings and sophisticated investment products can also be rolled out to rural customers with new technology. The payment banks could replace idle cash with digital money. He also said that there was possibility of collaboration of payment banks with the MFIs. Payment banks could also help in offer miroinsurance products.