Adressing the webinar on investor education on Wednesday, Reserve Bank of India (RBI) Governor Shaktikanta Das on Wednesday suggested banks to focus more on cash-flow based lending rather than relying on collaterals for their lending decisions.
"To improve the credit to gross domestic product (GDP) ratio, access to credit and cost of credit need to be addressed by lesser reliance on collateral security and greater cash-flow based lending," the RBI governor said at a webinar on investor education organised by National Council of Applied Economic Research (NCAER).
According to the governor, credit bureaus and the proposed Public Credit Registry (PCR) framework can improve the flow of credit as well as credit culture in the country,
Moreover, RBI has taken several initiatives to improve digital financial services, including pilot projects to make at least one district of every state or Union Territory 100 per cent digitally enabled by March 2021. Forty-two such districts are part of this initiative, he said.
To push digital literacy in the country, the RBI has adopted a ‘5 Cs’ approach. The Cs are “Content (including curriculum in schools, colleges and training establishments), Capacity of the intermediaries who provide financial services and education; leveraging on the positive effect of community-led model for financial literacy through appropriate communication strategy; and enhancing collaboration among various stakeholders,” the governor said in his keynote address.