Why is government Supporting Collaborations of banks with NBFC’S and Fintech Companies?

Rise of Digitalization and need of Collaboration-

Technology has risen , where digital Chanels are used tremendously on large scale either it be Loan disbursement or other financial services which makes this as new age banking. Their cooperation would yield surprising and remarkable consequences.Government is trying hard to push banks towards collaborations with non-banking financial companies (NBFCs) and fintech companies for co-lending and uplift the digital route. These collaborations will generate leads and make funding easier.

Encouragement by govt to banks –

Hardik Mukesh Sheth, director (banking operations) of the department of financial services , at an CII event said that the government is encouraging the public sector banks (PSBs) to work with the NBFCs and fintech companies to collaborate in the area of co-lending. He also mentioned that there is rise in the use of digital Technology and that will drive the digital era in banking sector.

How Fintechs are helping the banks ?

Fintechs are able to build good customer base by good understanding of customer behaviour.NBFCs focus more on creating customised products to fulfil individual demands. They can help the banks in increasing their efficiency and collaboration between them can learn towards increasing credit of the lenders.MD&CEO of Yes Bank Prashant Kumar said that NBFCs are critical not only for financial inclusion but also for raising credit offtake.FinTech’s are on the rise of acing the new technology which is makes Banks and NBFCs’ overall responsibilities much easier.

Need of Banks to work together with Fintech Technology –

It is very essential to combine the trust of banks and technology of Fintech Companies in order to serve the customers which will result in positive growth.MD of State Bank of India (SBI), international global market, C Sreenivasulu Setty stated the need of collaboration of banks Fintech technology which has to be on a sustained basis. He also said that the banks are spending money to address this issue.

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