India's central bank is to set up a committee to explore the potential for the country's fintech market which is predicted to double in worth to $2.4bn in the next four years.
The Reserve Bank of India's (RBI) executive director N.S. Viswanathan says that the multi-disciplinary panel will study "what kind of fintech business is happening in India, what kind should be ‘allowed to happen’ and how to create an ecosystem to ensure the ‘right kind’ of fintech is promoted".
Of particular concern to the panel is ensuring that the development of fintech does not create systemic risk for the existing financial services framework, says Mr Viswanathan. “There are some risks involved. What is clear is it will result in financial dis-intermediation, and we have to see how the banking system should handle that.”
A recent report, published by KPMG India and fintech incubator Nasscom 10,000 Startups, forecasts that India's fintech market will be worth $2.4bn by 2020. The growth will be enabled by the increased penetration of digital banking services and smartphone use as well as increased investor interest in fintech startups, states the report.
“Investor inclination in startup funding is evident in the swelling number of angel deals from 370 in 2014 to 691 in 2015 and investments increasing multi-fold from $247 million in 2014 to $1.5 billion in 2015.”
Evidence of the growing interest in Indian fintech startups can be seen in the recent round of fundraising by a new credit score advisory platform CreditVidya which attracted more than $2m from Indian venture capital firms.