By Shaji Varghese
It is an exciting time for India with our grand plan to be Viksit Bharat by 2047 and this can certainly be achieved through the financial inclusion of millions of Indians who are yet to be part of formal banking and ensuring adequate credit supply. I believe all of us individually and as organisations have a substantial role in achieving and ensuring that this vision is realised.
India’s Banking and Financial Services sector will play a significant contributory role in this – for any nation with a 1.5 billion population, the ideal and pivotal aspect is the inclusion of its citizens in formal banking and access to credit.
Formal banking sectors contribute in their way while NBFCs are focused significantly on bringing the lower layer of the pyramid into organised banking services. It does not stop when one person in the family joins the formal financial bandwagon but the entire family including women must be made part of it.
According to a recent Periodic Labour Force Survey (PLFS), the Unemployment Rate (UR) in urban areas decreased to 6.7% during January-March 2024 while Female UR decreased to 8.5% which is certainly a positive sign.
Some companies are focused on providing platforms for micro and small entrepreneurs and businesses to flourish by giving easy access to credit for growth.
Recently, the RBI has announced that they are looking at a Unified Lending Interface (ULI), which am sure will help the MSME borrowers by propelling access to credit for the segment. A significant disadvantage for this community is their inability to establish creditworthiness while availing of financial support from an organised player. Once this comes into effect, the issue will be addressed providing more avenues for these businesses to thrive and grow.
The credit supply is significant for any business to flourish. Indian MSMEs need adequate credit supply to enhance their business and NBFCs today are at the forefront to ensure their access to financial requirements. The Companies even amend and revise their product offerings to ensure they meet the lifecycle requirements of the customers.
Gold loan NBFCs are the gateway for lot of customers who can avail loans with ease, create and enhance credit history, and flexible short tenures with no prepayment charges. Gold loans do not require lengthy documentation or any significant credit history as a pre-requisite to avail of the loan. There has been an upsurge in gold loan firms and other microfinance institutions that are focusing on uplifting the lower middle-income segment in the country.
The government, financial institutions and the country’s digital public infrastructure together will be the impetus for financial inclusion in India aiding its growth to be a developed nation by 2047.
-The author is the CEO, Muthoot FinCorp Limited. Views expressed are personal.
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