Hello everyone,

Welcome to the 49th edition of The Pattern, a weekly newsletter where I bring you the latest from the worlds of finance, economy, and technology. 

This week, I’m coming to you from India’s financial capital, Mumbai! We’re hosting The India Credit Risk Management Summit & Awards at The Lalit, and it’s in full-swing as I write this.

It’s been a day full of buzz around credit risk, technology, data and underwriting - basically everything that we at FinBox live and breathe! 

Speaking of risk, a new  survey  from TransUnion shows that new-to-credit (NTC) borrowers across all age groups in India (and abroad) perform better than those with established credit and risk scores.

Further, the survey has termed them ‘key contributors’ to India’s sustainable financial inclusion and growth. 

Of course, we’re pretty chuffed with these findings. All of us at FinBox have worked hard to build products that’ll bring NTC customers into the fold of formal credit, and it’s good to see this essential group of borrowers being acknowledged as key drivers of India’s growth story.

In keeping with the theme of financial inclusion, earlier this week, Kristalina Georgieva, managing director of the International Monetary Fund cited India as an  “excellent example of technology boosting financial inclusion"  adding that  "last month, this layer of India’s digital public infrastructure processed over 8 billion transactions.” 

Since 2017, the year of UPI’s launch, India has been improving financial inclusion at a CAGR of 5% - and since 2018, we have more than  doubled   payment digitisation. 

Image taken from: https://m.economictimes.com/tech/technology/chipmakers-turn-cutthroat-in-fight-for-share-of-federal-money/articleshow/98207975.cms

Given this massive growth, going beyond India’s borders was only a natural progression - one that’s been in the works for a while now.   And just this week, UPI was linked with Singapore’s PayNow - effectively enabling low-cost cross-border payments between the two countries.

The move is exciting for many reasons. For starters, it’ll boost trade and investment between the two nations, since businesses can transact with each other quicker and more efficiently. Secondly, it aligns closely with the G20’s financial inclusion goal of driving faster, cheaper, and more transparent cross-border payments. 

Most importantly though, it benefits people - students and professionals who live away from home and need a convenient way to transact with their friends and family. Prior to this linkage, residents and businesses used to send money through physical wire transactions, for which charges started at around  8.6% .

It seems that UPI’s international journey has just begun -  as the second day of the G20 Finance and Central Bank Deputies meet came to a close, several countries from across the Commonwealth, Caribbean, Africa, and South Pacific expressed interest in leveraging India’s infrastructure or building their own. I’m excited to see how this pans out and what it’ll mean for India’s position in the global economy.

In other news, the RBI earlier this month expanded the scope of TRedS to allow insurance companies to act as ‘fourth participants’, other than MSME sellers, buyers, and financiers.

This is especially meaningful to MSMEs because it will encourage financiers to allocate limits on buyers with a lower credit grade, thereby aiding MSMEs who offer several different kinds of buyers.

Just last week, our CEO Rajat Deshpande wrote an in-depth piece on TRedS, its opportunities, limits, and possible policy interventions. Check it out  here. Between the digits 11%:  The number to which gross non-performing assets (NPAs) in the MSME segment are likely to rise to by March 2024 

$100 billion:  The current liquidity capacity of public sector banks

10 bps : The number of points by which India's largest lender, State Bank of India, has hiked the MCLR

With that, I will wrap up this week's edition. As always, leaving you with some reading recommendations below. 

• Young Indians Drive Credit Demand, Growth In Consumption-Led Credit Products: CIBIL Report

• MSMEs & Delayed Payments: Age-Old Pandemic India Won’t Talk About

• From struggling to thriving: How Credit Guarantees can bridge the credit gap faced by MSMEs 

• How good governance, focus on service delivery helped India pull 400 million people out of poverty

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 never miss any updates. 

Cheers, 

Mayank

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