Fintechs' small-ticket loans crucial in financial inclusion, says RBI Dy Governor Rabi Shankar

RBI’s Deputy Governor emphasised on the regulator’s proactive approach in fostering a healthy dialogue with the fintech ecosystem over the past decade.

The country's fintech lenders are playing a crucial role in financial inclusion, with 45 percent of the companies disbursing small-ticket loans under Rs 25,000, said T Rabi Shankar, the Reserve Bank of India’s Deputy Governor, while speaking at the IIMA Ventures’ Bharat Inclusion Summit in Bengaluru on April 22.

Rabi Shankar pointed out that this has helped in a significant shift in the models as well as reaching the credit-poor sections of society.

“The RBI's efforts align with the broader national goal of financial inclusion, which has seen significant progress. Basic savings bank deposit accounts have surged from 39.81 crore to 70 crore by 2024, while 54% of Self-Help Groups (SHGs) have accessed credit facilities,” Shankar said.

RBI’s Deputy Governor emphasised on the regulator’s proactive approach in fostering a healthy dialogue with the fintech ecosystem over the past decade.

“Initially, there was a noticeable gap between the regulatory body and the burgeoning industry. However, concerted efforts have been made to bridge this divide, leading to frequent and productive conversations,” Shankar said. He added that these dialogues - intensified in the last one year - were instrumental in understanding how regulations can facilitate, rather than hinder, the sector's growth.

A key outcome of this collaboration has been the establishment of Self-Regulatory Organisations (SROs), with more expected to follow, Shankar pointed out. These bodies are intended to foster a culture of self-governance within the fintech space, ensuring compliance and best practices.

Fintech Rising

India's fintech sector - riding on explosive growth with 13,500 companies – has an adoption rate of 87%, which far surpasses the global average of 64%, he added.

The high adoption of new innovations has been possible by the widespread use of real-time mobile payments platform UPI, Aadhaar-based digital payment AePS, Bharat Billpay, toll collection Fastag, among other digital initiatives.

“Technology is a cornerstone of this financial transformation. The RBI's key strategy involves leveraging Digital Public Infrastructure (DPI), allowing fintechs to innovate and build value-added services. DPI has been instrumental in lowering transaction costs and enhancing interoperability,” Shankar said.

The RBI's core theme for tech in 2025 is ‘e-payments for everyone, everywhere, every time’, with Interoperable QR, Two-Factor Authentication, and UPI emerging as preferred payment technologies.

Rural Outreach by Fintechs

The Business Correspondent model, also championed by the RBI, has been vital in extending financial services to rural areas. The National Centre for Financial Education has played a crucial role in enhancing financial literacy among farmers, SHGs, and students.

The integrated ombudsman system is another critical component, ensuring consumer protection and continuously monitoring the evolving financial landscape.

“India's Financial Inclusion Index, which considers access, usage, and quality, currently stands at 64.2, demonstrating year-on-year improvements,” Shankar noted.

Moreover, the RBI Innovation Hub (RBIH) has been pivotal in bridging the gap between the regulator and the fintech ecosystem. Initiatives like the Unified Lending Interface (ULI) and the ‘mule hunter’ DPI, which has shown over 90% success in trials, are examples of groundbreaking innovations. A digital intelligence platform to assign risk scores to transactions is also under development, further showcasing the RBI's tech-forward approach.

RBI Dy Guv on CBDC

On Central Bank Digital Currency (CBDC), Shankar noted the ongoing iterations in technology and issuance models, and emphasised CBDC's potential to revolutionise global retail payments, currently facing high cost and delays. While global efforts in cross-border transfers have seen limited traction, CBDC could be a game-changer due to its digital nature, transcending geographical and time barriers.

The RBI's approach to tech innovation focuses on population-scale, macro-impact, and infrastructural projects. With UPI's success and the upcoming CBDC rollout, customers will have increased choice and efficiency in their financial transactions.