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NITI Aayog makes a pitch for forming digital banks
Business Standard
|July 21, 2022
Think tank suggests a licensing and regulatory framework for such lenders
The Centre's policy think tank NITI Aayog has made a case for setting up digital banks, which would accept deposits and advance loans through digital means, and suggested a licensing and regulatory framework for such lenders.
A digital bank would be a bank defined in the Banking Regulation Act, 1949, and shall have its own balance sheet and legal existence. Such a bank would be different from the 75 Digital Banking Units (DBUS)-announced by Finance Minister Nirmala Sitharaman in Union Budget 2022-23-which ar being set up to push digital payments, banking and fintech innovations in underserved areas.
The success India has witnessed on the payments front is yet to be replicated in meeting the credit needs of its micro, small and medium businesses, said a NITI Aayog report titled 'A proposal for Digital Banks in India: Licensing and Regulatory Regime'.
"The current credit gap and the business and policy constraints reveal a need for leveraging technology effectively to cater to these needs and bring the underserved further within the formal financial fold," the report said.
This story is from the July 21, 2022 edition of Business Standard.
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