Banking The Unbanked

Is the underserved india ripe for a fintech revolution? With every financial service provider aiming at financial inclusion of the economically weak, it is considered as one of the hottest topics today. But, what exactly does it convey?

- Vanita Peter D'Souza

According to the Chairman of Committee on Financial Inclusion Dr C. Rangarajan, the term can be defined as the process of ensuring access to financial services along with timely and adequate credit supply to the financially weak at an affordable cost. As per census 2011, only 58.7 per cent of households are availing banking services in India. The number of people who have access to credit is not very impressive – which is less than 10 per cent. This suggests, majority of the population with ambitions beyond their capabilities is hungry for credit. For which, they look for informal sources such as private lenders.

This is because not many traditional financial institutions, both banks and Non-bank financial company (NBFC)s, are willing to serve them as the ticket size of the loans are small and considered to be too expensive to service. This is where the fintech start-ups have found their sweet spot and an entirely untapped market to cater. As a part of a fintech fund that looks into start-ups that are serving the underserved segment, Varun Malhotra, Vice President, Quona Capital, opines the whole concept of financial inclusion has gone beyond just solving the problem of numbers. It has become nuanced and the problem is a lot more complex.

“It's not just about sanctioning a loan but also how do you create an entire ecosystem or culture, understanding the client's needs and hand holding them through their journey rather than just being a transaction relationship,” he says.

Awareness Per Se