India sets focus on fintech market

India sets focus on fintech market

India's central bank is to set up a committee to explore the potential for the country's fintech market which is predicted to double in worth to $2.4bn in the next four years.

The Reserve Bank of India's (RBI) executive director N.S. Viswanathan says that the multi-disciplinary panel will study "what kind of fintech business is happening in India, what kind should be ‘allowed to happen’ and how to create an ecosystem to ensure the ‘right kind’ of fintech is promoted".
 
Of particular concern to the panel is ensuring that the development of fintech does not create systemic risk for the existing financial services framework, says Mr Viswanathan. “There are some risks involved. What is clear is it will result in financial dis-intermediation, and we have to see how the banking system should handle that.”
 
A recent report, published by KPMG India and fintech incubator Nasscom 10,000 Startups, forecasts that India's fintech market will be worth $2.4bn by 2020. The growth will be enabled by the increased penetration of digital banking services and smartphone use as well as increased investor interest in fintech startups, states the report.
 
“Investor inclination in startup funding is evident in the swelling number of angel deals from 370 in 2014 to 691 in 2015 and investments increasing multi-fold from $247 million in 2014 to $1.5 billion in 2015.”
 
Evidence of the growing interest in Indian fintech startups can be seen in the recent round of fundraising by a new credit score advisory platform CreditVidya which attracted more than $2m from Indian venture capital firms.

Comments: (2)

A Finextra member
A Finextra member 08 June, 2016, 21:30Be the first to give this comment the thumbs up 0 likes

Wonder if it is within the remit of the Central Bank to regulate the Financial Technology industry. I would have thought that they would only be able to regulate what is deployed, not what is developed.

Ketharaman Swaminathan
Ketharaman Swaminathan - GTM360 Marketing Solutions - Pune 09 June, 2016, 19:19Be the first to give this comment the thumbs up 0 likes

@FinextraMember: Good question but you'll be surprised at how far and wide RBI's tentacles reach in India. Retailers, TELCOs and many other non-banking industries will tell you they have to do xyz because of "RBI regulations". I've actually asked some of them why RBI regulation is applicable to their industry. Not a single guy has been able to answer my question but but not a single guy has relaxed on xyz either. I don't expect fintech to behave any differently. Which is amazing considering that, in the same country, other startup industries like "cabtech" - aka Uber, Ola - brazenly defy government edicts and continue to ply their cabs even after being issued orders to stop operations (like it happened in Bangalore last week).