According to the estimation of the World Bank, 2 billion adults don’t have a bank account and there are many more that have a slight connection with the banking and organized financial system. As the world moves more and more towards digitization, this stark difference can be minimized as technology can bring up innovative approaches rarely given a thought by established, bureaucracy loving financial institutions over the world and in India itself.
However, India is changing and catching up with the fintech revolution that is happening across the world. With ‘Digital India’ and ‘Pradhan Mantri Jan Dhan Yojana’, Indian government is trying its best to bring people into the financial inclusion landscape. PMJDY alone managed to bring more than 306 million people into the organised financial setup. While Demonetization compulsively brought people into digital transaction and deterred unorganized sector in dealing with cash; the whole exercise was exacerbated by bad execution and the approach that India, largely being an unorganized economy can’t be trained and brought under the regulated financial purview.
Amidst all claims of India being averse to digital economy, digital transactions have seen a jump of 584 per cent since demonetisation which indicates that people are choosing e-financing over traditional banks and financial institutions as the reach of mobile and data increases. Right regulatory environment can promote financial inclusion lest expansion of financial services happens through innovative ways.
As RBI notifies P2P lending platforms as NBFCs and has issued master directions to regulate the same, the sector can propel Indian economy in the right direction. With an interface and experience that user can understand, rates that can be appealing to both borrowers and lenders alike, availability to individuals and small business neglected by banks, less documentation and shorter loan processing; P2P lending is poised to become the next popular tool to reach out to financial dark zones where even banks may not be able to venture.
Currently worth of $ 3.2 million, the P2P lending industry shows a promising growth trajectory to a range of $ 4 to $ 5 billion by 2023. In fact, alternative lending startups in India have already amassed a funding of around $ 220.66 million which clearly shows a spike in the interest in the said sector’s future possibilities.
According to Mr. Sumit Sharma, CEO of the online peer to peer leading financial portal, P2Peasy.com, ‘with easier access to technology, data, social media, and biometric tool for identification and verification, due diligence should not be a problem.’ As RBI and other regulatory agencies are involved in formalising P2P industry, it surely can complement the existing banking and financial structure to bring the last sceptical, unsure person into the umbrella of financial inclusion.