Niti Aayog paper moots full-stack digital banks

niti aayog paper moots full stack digital banks

Sumary of Niti Aayog paper moots full-stack digital banks:

  • NEW DELHI: A discussion paper unveiled by government think-tank Niti Aayog has floated the idea of full-stack digital banks to deepen banking services and bridge credit gaps across the country, leveraging technology and massive digitalisation achieved so far.
  • As the name suggests, however, digital banks (DBs) will principally rely on the internet and other proximate channels to offer their services and not physical branches, it said.
  • A useful point for consideration will be to evaluate a “full-stack” DB licence, which offers greater regulatory control and also further deepens the under-banked Indian market, instead of a piecemeal approach, the paper added.
  • “The success that India has witnessed on the retail payments and credit front has failed to replicate when it comes to payments and credit needs of its small businesses.
  • The current credit gap and the business and policy constraints reveal a need for leveraging technology effectively to cater to the needs of this segment and bring them within the formal financial fold,” said Niti Aayog CEO Amitabh Kant.
  • It recommended in the restricted phase, a digital business bank may be required to bring in Rs 20 crore of minimum paid-up capital.
  • Upon progression from the sandbox into the final stage, a full-stack digital business bank will be required to bring in Rs 200 crore (equivalent to small finance banks).

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