The suffering during demonetization and the adoption of digital payments made people better prepared to survive the extended lockdown period during the first wave of the Covid-19 pandemic.
The demonetization of the old banknotes of Rs 1,000 and Rs 500 from November 8, 2016 at midnight took everyone by surprise. While people suffered during demonetization to get cash and redeem the banned banknotes, it gave digital currency a big boost.
“Demonetization has resulted in a severe cash shortage in the economy, which has resulted in increased acceptance of the digital money business. According to reports published by RBI, total credit card outstanding jumped 39% from September 2016 to September 2017. Access to credit cards was limited to the wealthy and upper middle class of the country. The increase in the penetration of low cost smartphones and the low cost of 4G data has further accelerated the access of the Indian population to phones connected with the Android / iOS application ecosystem. There was still an unmet demand for low cost, quick disbursing personal loans. A large unorganized market of moneylenders flourished as a result. Demonetization and access to 4G connected smartphones has made people accept this digitally lending format much better, ”said Ankush Aggarwal, founder of Avail Finance.
As cash became scarce, even street vendors began to accept digital currency, providing a platform for fintech startups to multiply.
“The advantages of online credit are many, the customer does not have to wait hours and days in bank queues to fill out 5 to 6 page forms. Entrepreneurs across the country have taken up the challenge of improving the credit access experience. buy now, pay later and so on, ”Aggarwal said.
The suffering during demonetization and the adoption of digital payments made people better prepared to survive the extended lockdown period during the first wave of the Covid-19 pandemic. The intensive use of technology during the pandemic has also helped to further accelerate the process of digitization.
“All of this has been further accelerated recently by the Covid-19 pandemic. We have seen a more than 50% increase in UPI transactions among the blue collar workforce over the past 18 months. Thanks to India Stack, users are now comfortable to avail personal loans and lines of credit through loan apps like Avail Finance. The on-app application process combines the benefits of the Aadhaar-based e-KYC framework, UPI Autopay and Account Aggregator to provide transparent and instant credit access. Users are also increasingly aware of their credit score and regularly track it online on the Avail app, ”said Aggarwal.
With the increase in cyber fraud cases and the adoption of digital payment methods, the government has taken various measures to secure the system and facilitate the processes.
“Several ecosystem stakeholders, including NPCI, RBI, UPI payment companies and private lending companies, are creating products and services to solve the multiple problems of the digital financial ecosystem. The pace of innovation in the field of fintech is unprecedented in the history of time. In summary, demonetization has become a trigger point for the fintech revolution in India, followed by several waves like an increase in smartphone and 4g data penetration and Covid, ”Aggarwal said.
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