Government think tank Niti Aayog is a full-stack “digital bank” that relies on the Internet and other proximity channels rather than physical branches to close the current credit gap facing MSMEs. Proposed the establishment of.
In a discussion paper entitled “Digital Banks: Proposals for Indian Licenses and Regulatory Systems,” think-tank provides templates and roadmaps for digital banking licenses and regulatory systems. NITI Aayog is soliciting comments on the discussion paper until December 31, 2021.
Amitabh Kant, CEO of NITI Aayog, said in the preface that this discussion paper reviews global scenarios and recommends a new segment of regulated entities, full-stack digital banks, based on them. “Based on the comments received, the paper will be finalized and shared as a policy recommendation from NITI Aayog,” he said.
This paper recommends a two-step approach: first use a digital business bank license, and then policy makers and regulators gain experience from the former before using a digital (universal) bank license.
Even if you have a Digital Business Bank license, NITI Aayog recommends a tuned approach that consists of the following steps:
- Issuance of restricted digital business bank licenses.License is limited in terms of quantity / value of customers receiving service
- Enlistment (of licensees) in the regulatory sandbox framework enacted by the Reserve Bank of India (RBI).
- Issuance of “Full Stack” Digital Business Bank License
As NITI Aayog is a 63 million MSME in a country that contributes about 30% to gross domestic product (GDP), about 45% to manufacturing output and more than 40% to exports, credit penetration is still a public policy. It states that it is an issue. Employment in the “important” section of the population-standing next to the agricultural sector in terms of quantity.