Hello everyone,     

Welcome to the 104th edition of The Pattern, a weekly newsletter where we dive into the latest from the world of economy, finance and technology. Let’s get started. 

Looks like the RBI is standing strong in its commitment to cleaning up digital lending. The regulator recently announced its plans to set up a public register of white-listed lending apps in an effort to curb the threat of illegal lending apps. It plans to do this via the ‘Digital India Trust Agency’ or DIGITA, that will facilitate the verification of lending apps and maintain the aforementioned register. 

Any app that doesn’t carry the DIGITA ‘verified’ signature will be considered unauthorised by law enforcement agencies. 

This comes months after officials from the Ministry of Electronics and Information Technology met with their counterparts from the Ministry of Finance, as well as members of the RBI to come up with a strategy on how to curb illegal loans.

While how well the idea will fare remains to be seen, it seems as though the RBI is taking a well-rounded approach to root out the weeds from digital lending. In fact, the regulator has already shared a list of 442 unique digital lending apps with the IT Ministry to whitelist with Google.

In other news, FinTechs are currently scrambling to get further clarity from the RBI around the rules of engagement with banks to deploy CBDC use cases. In last week’s edition, I had written about the RBI’s proposal to enable the distribution of CBDCs through Non-bank Payment System Operators.

The move is expected to expand access to CBDCs, but at the moment, there is little clarity around operational guidelines and product constructs between the stakeholders involved. Some major banks and regulated FinTechs are already holding talks on how to build use cases on CBDC. However, there is concern among the latter about the authorities opting for a zero MDR stance in this context as well, especially given the major investments FinTechs will have to make towards setting up the requisite server systems and blockchain technology.

According to the central bank, the current CBDC pilot comprises close to 50L users and 4L merchants who have processed over 2.2 cr transactions till date. The two major use cases being tested at the moment include subsidy payments for farm inputs and corporate expense management.

That’s all from me for this week – leaving you with some fascinating reads and numbers, as always!

Between the digits

• ₹400 trillion: The combined market capitalisation of BSE-listed stocks as of April 8

• 57%: The rise in India’s UPI transaction volume in FY 2023-24

• 59%: Increase in the total funding received by the FinTech sector in Q1 2024, as compared to Q4 2023 Reading list

• The RBI is fighting fit at 90

• The digital transformation: How UPI and AI are shaping MSME lending in India

• Record household debt: Loans outpace deposits for 3rd year in a row

• Credit-deposit ratio: A key metric for India's bankers is sending out a red signal

Thank you for reading. If you liked this edition, forward it to your friends, peers, and colleagues. You can also connect with me on Twitter here and follow FinBox on LinkedIn to always get all updates.

Cheers,

Mayank

All opinions expressed are my own and do not necessarily reflect the views of FinBox or its promoters.