Centre working on framework for widening credit push: Kant
India’s private credit-to-GDP ratio lowest among global peers: Niti Aayog CEO
Niti Aayog CEO Amitabh Kant on Saturday said that India’s private credit-to-GDP ratio was the lowest among its global peers and that the government was in the process of putting in place a framework for a credit push towards untapped segments.
Addressing a virtual event organised by the Global Alliance for Mass Entrepreneurship (GAME), Mr. Kant said that the credit scenario in India in recent years, for a greater part, had been seen as a drag on the economy.
“India’s private credit-toGDP is the lowest among its global peers. Countries such as China and South Korea have had tremendous growth, massive improvement in their living standard on the back of high leverage.
“Even Vietnam’s recent development has been partially a result of growth in its private debt,” he said.
Mr. Kant also said micro, small and medium enterprises (MSMEs) play a crucial role in providing employment but their credit needs are largely unmet by the formal financial sector.
“The government is in the process of putting frameworks and protocols in place for credit to be pushed to segments that have largely been untapped,” he said.
Noting that financial inclusion depended on the regulatory environment, Mr. Kant said, “While a new business model will be required to fill the current gap in achieving the necessary credit flow, there is a need to change the regulation as and when required.”
The entire process would require bringing all stakeholders such as banking and industry professionals, together, he added.
Mr. Kant said the MSME sector would have more credit needs going forward. So, more innovative methods would be key. He said the sector’s credit gap was estimated to be ₹25 lakh crore.
Mr. Kant said the financial sector was undergoing a massive change and there had been a dramatic change in the credit scenario also.
“Over the past few years, there has been a flood of fintech (financial technology) players, which are bringing transformational change in the way financial services are provided,” he added.