Fintech Can Help Public Sector Banks To Leapfrog By Providing Scale And Improve Quality Of Lending

Krishnamurthy Subramanian, Chief Economic Adviser, Govt of India has said that implementation of Fintech can help public sector banks to leapfrog as it can provide scale and improve the quality of lending, especially to large corporates. He added, it has been seen that Fintech can reduce NPAs even while enhancing lending volumes. Addressing a Special Session at the 17th Annual Capital Market Conference 'CAPAM 2020' organized by FICCI, Subramanian said that the most important aspect of economic growth is the banking sector and India lacks in this area.

In the Economic Survey, India only has one bank listed in the global top 100 banks in 2019; hence, the emphasis should be on making the banking sector globally-scaled and Fintech can play a vital role in it. Highlighting the importance of technology, Subramanian said that technology can play a pivotal part in helping the banks to achieve both scale and quality. Banks can employ artificial intelligence, machine learning and data analytics to identify willful defaulters. These technologies can also help in capturing the willingness to repay by the lenders as well.

Subramanian said that COVID-19 and global financial crisis highlighted the significance of ethical wealth creation and self-reliance (Atmanirbharta). For achieving self-reliance, India needs cutting-edge capabilities and capabilities cannot be built without competition. Capabilities are built by utilizing comparative advantages and India's comparative advantage lies in its large domestic market. Subramanian said that Indian firms can craft their products and services by catering to the entire market, not just the richest 25%. Correct price points and volumes can help in reaching to people at the bottom of the pyramid as they also aspire to consume products availed by the affluent.

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