Indicus Centre for Financial Inclusion (ICFI)

Our monthly news mailer is out from Indicus Centre for Financial Inclusion (ICFI), bringing the latest in financial inclusion and digital payments in India, curated by Sumita Kale. Highlighting news and views from Reserve Bank of India (RBI) NABARD - National Bank for Agriculture and Rural Development Business Standard Livemint News Today moneycontrol.com The Economic Times Renuka Sane TrustBridge Global Foundation Tamal Bandyopadhyay Dinesh Nair Raghu Mohan Andy MUKHERJEE Pratik Bhakta MicroSave Consulting (MSC) Sa-Dhan Association JPMorganChase Sukhpreet Kaur Arshi A. Arundhati Ramanathan The Ken Mohammad Haris News18 India Fintech Association for Consumer Empowerment (FACE) Malika Anand, Alexander G. Sotiriou, David Kruijff Swati Sawhney Seth O'Farrell The Banker Aditi Shah Manvi Parashar Aapti Institute LEAD at Krea University Do read, comment, share and subscribe, thanks! https://lnkd.in/gbyNEqP8

Dinesh Nair moneycontrol.com analyses the latest action and talk by the Reserve Bank of India (RBI) on #NBFCs. "On October 9, in his statement announcing the monetary policy decision, RBI Governor Shaktikanta Das devoted six paragraphs and 427 words to deliver a clear message to a specific industry—the non-banks. Das stated that some NBFCs are pursuing an imprudent 'growth at any cost' approach, which can be counterproductive for their own health. Such practices are further accentuated by what appears to be a 'push effect', as business targets drive retail credit growth rather than actual demand for loans. The resulting high costs and high indebtedness could pose financial stability risks. Furthermore, he emphasized that NBFCs need to review their compensation practices, variable pay, and incentive structures, some of which appear to be purely target-driven in certain NBFCs. Such practices may result in an adverse work culture and poor customer service. This wasn’t a passing remark—it was a prelude to action." Read the full analysis at the link: https://lnkd.in/gzXt_FEC

Tamal Bandyopadhyay Business Standard deep dives into Reserve Bank of India (RBI)'s concerns and recent actions on NBFCs. https://lnkd.in/g5ZfMEhk

The Fintech Association for Consumer Empowerment (FACE) is to change its membership profile to make it more representative of the sector. It is also examining the possibility of creating sub-groups so that entities which are strictly not fintechs but use digital modes – like business correspondents – can also join in. FACE is the first self-regulatory organisation (SRO) to get the Reserve Bank of India (RBI)’s (RBI) nod after it released the ‘Framework for SROs in the fintech sector’. According to FACE’s chief executive officer Sugandh Saxena, “As per SRO-fintech (SRO-FT) charter, we are on the way to scale and diversity membership in all manner of speaking. Given the nature of the fintechs, inclusive membership is critical so that a fuller set of stakeholders and the entire ecosystem is involved and benefits from the SRO.” Read more at the link: https://lnkd.in/gBuNJENS

Raghu Mohan Business Standard write on the move by the Business Correspondent Resource Council (BCRC) to make a case for an increase in the commission paid to agents with the Ministry of Finance, along with related issues such as the setting up of an annual pricing review committee and a re-examination of the penalties imposed by banks on business correspondents (BCs). The BCRC is advocating for a 30 basis point increase in the commission paid by banks for cash withdrawals, cash deposits, money transfers, Aadhaar-enabled Payment System (AePS) transactions, and other banking and financial services.   Currently, the commission paid to BCs is not uniform and varies across banks. For example, in the case of cash withdrawals, the commission ranges from 0.5 per cent of the transaction amount (capped at Rs 15) to 0.4 per cent (capped at Rs 40 for amounts up to Rs 10,000).    “Cash-in, cash-out (CICO) is the earning mainstay. Though CICO transactions constitute more than 60 per cent of their income, there’s been no revision in the pricing for the last decade,” said a senior BC official. Dharanidhar Tripathy https://lnkd.in/gUHNCCGb

Raghu Mohan Business Standard looks at the latest push from the Reserve Bank of India (RBI) to fintechs for a “same-day” loan offering targeted at vendors and hawkers. Such a loan is given out and repaid within 24 hours and seeks to bolster financial inclusion at the bottom of the pyramid. Sources said that the need for such a scheme had figured in talks with the central bank’s FinTech Department. https://lnkd.in/gWKpc4-H

MicroSave Consulting (MSC), Sa-Dhan and JPMorganChase collaborate towards a report - Decoding the Financial Health of Women-owned Microbusinesses – that aims to unpack the concept of financial health specifically in the context of women entrepreneurs. The research, covering six regions—Delhi-NCR, Gujarat, Maharashtra, Telangana, Karnataka, and Tamil Nadu— collected data through 1,460 computer-assisted personal interviews, key informant interviews with financial institutions and support organizations, and desk research. https://lnkd.in/giwyM2Q8

Sukhpreet Kaur and Arshi A., MicroSave Consulting (MSC), set out five recommendations to address insurance mis-selling in rural India. https://lnkd.in/gRt4jE2Y

NABARD - National Bank for Agriculture and Rural Development released results from its first RURAL ECONOMIC CONDITIONS & SENTIMENTS SURVEY, a bi-monthly survey. Round 1 (September 2024) aims at collecting quantitative and qualitative data, both backward looking (economic conditions) and forward looking (household sentiments) on a limited set of key macro-financial parameters. During the last year (i.e., the 12-month period preceding the survey period), 37.6% of rural households reported that their income increased, as against 80.1% reporting an increase in consumption expenditure. This imbalance in survey results between income and expenditure may explain majority of the households reporting either no change (51.3%) or decline (27.8%) in financial savings. Moreover, while 40.2% of the households reported an increase in borrowings during the year, only 22.2% indicated an increase in making any capital investment suggesting that borrowed resources might have been used for incurring consumption expenditure. Thus, the momentum of rural economic activity appears to have remained buoyant on the back of consumption expenditure during the last one year.  https://lnkd.in/gT3wbQUk

The Reserve Bank of India (RBI) has today, in exercise of its powers under Section 45L(1)(b) of the Reserve Bank of India Act, 1934, issued Directions to four NBFCs to cease and desist from sanction and disbursal of loans, effective from close of business of October 21, 2024 Read the press release for details: https://lnkd.in/gnF6CAgB