The Pattern #31: UPI leaps, MSME credit jumps, and RBI bounds

Mayank Jain   /    Head - Marketing and Content    /    2022-10-14

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    Hello and welcome to this week's edition of The Pattern!

    It’s been yet another action-packed week for finance in India, and as always, here’s my wrap-up to get you up-to-date.

    For starters, The Reserve Bank of India (RBI) continues on its quest to bring order into the FinTech and NBFC space. The regulator recently published a list of 16 ‘upper layer’ NBFCs that must conform to structure regulations.

    This scale-based NBFC regulation was announced last year and is divided into the base, middle, upper, and top layer. The upper layer includes NBFCs that need increased regulation based on several metrics.

    These 16 upper layer NBFCs will now have to develop an implementation strategy to conform to the new set of regulations within three months.

    It’s an interesting move, considering NBFCs all operate under the same license but they’re now being regulated differently based on size, activity, and perceived riskiness. Like they say though, with great power comes great responsibility, and RBI’s eagle-eye on new-age finance players is an obvious consequence of their increasing power and reach.

    Read: Five bitter pills that RBI prescribes to make digital lending healthy again

    On another note, there’s good news for any of you planning a holiday in Europe - NPCI’s international arm NPCI International Payments Ltd (NIPL) has partnered with France-based digital payment company Worldline to launch UPI and RuPay payments in the region.It’s clearly a testament to just how popular the payment method has become - in fact, UPI transaction volume crossed USD 1 Tn this year, for the very first time since its inception.

    One can’t help but wonder what kind of teething troubles UPI will face when being used internationally. For starters, domestically, UPI currently has a cap of INR 1 L on most transactions. Also, in case of any disputes, foreign exchange considerations will make resolution rather complex. We’ll just have to wait for more details on the nuances of this launch to see how these potential challenges have been addressed. Read: UPI123Pay: The leg-up for India’s FinTechs

    Coming to our favorite topic here at FinBox - it’s heartening to see that loans disbursed to MSMEs saw a  67.9% growth in the quarter ending June 2022, as compared to the June quarter last year.

    There has been a steady uptick of credit to the MSME sector for a while now, and this year’s Budget saw a renewed focus on lending to the sector, with the Emergency Credit Line Guarantee Scheme being extended to March 2023.

    While the credit gap very much remains, it’s good to see steps in the right direction. Fingers crossed, in the next few years, we may see this essential yet underserved sector reach its full potential.

    Read: Here's how QR Codes can help close India’s MSME credit gap of INR 25 Tn

    Which reminds me, we at FinBox have some exciting news of our own! We’re hosting our first-ever live webinar on how FinTechs can unlock the $350 billion lending opportunity for MSMEs. Our CEO Rajat will be joining our co-founder Srijan, Head of Data Science and Risk at IIFL Arihant Jain, and Head of Credit and Partnerships at Vyapar, Kushal Kothari - and it’ll be moderated by yours truly!

    Don’t forget to sign up and I hope to see you there.

    That’s all from me for this edition. As always, here are some recommended reads from this past week:

    Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on Twitter here and follow FinBox on LinkedIn to never miss any of our updates. 

     

    Cheers, 

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