Financial services are going through a digital transformation, that has a strong impact on inclusion. In India, digital lending is taking off, with a rise in online consumer lending. A new report, “Credit Disrupted: Digital MSME Lending in India”, by Omidyar Network and Boston Consulting Group, estimates the potential of digital lending to MSMEs as a 10 - 15 fold increase touching $80 - 100 billion in annual disbursements by 2023. However, as pointed out by Graham Wright in a blog post, technology brings with it both opportunities and threats and he identifies the explosion of digital consumer credit in its current form as a threat, rather than an opportunity.

Here, the RBI should take lessons from the experiences in Kenya and Tanzania, where loan delinquency rates from digital credit are high. It is important to monitor the trends in the industry and enforce strong customer protection measures; exercises like CGAP’s transaction data analysis with the Bank of Tanzania may be a useful template for the RBI to follow. CGAP research shows that regulators can do a lotto ensure improved transparency on loan terms and conditions, better credit screening models, encourage widespread deliberations on product suitability etc.

However, a recent undercover report by ET Wealth revealed that banks continue to mis - sell insurance and other financial products, despite the RBI’s directive a year ago. Clearly, the RBI needs to take customer protection more seriously, and monitor more closely, rather than leave grievance redressal to ombudsmen. Digital credit can be a boon or a bane for inclusion, it is for the regulator to lay down the appropriate path for providers.

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• ICFI Blog: Emerging Pivotal Role of NPCI, October 2018
• Pradhan Mantri Jan Dhan Yojana Progress Report
• RBI Electronic Payment Systems – Data

• Fintech For Inclusion: Challenges And Opportunities

• DBT for power: Prepare the ground first

• With customers' nod, banks keep using Aadhaar for e-KYC

• Examining mobile banking as a tool for financial inclusion in India

• Half of India's ATMs may shut down by March 2019, warns industry body

• Banking a billion: India's thrust on digital economy propels country towards financial inclusion, societal transformation

• Financial inclusion: Industry participants will need to redouble their efforts

• Truecaller Pay to go live will Bharat Bill Payments Service in December

• Foreign digital payment cos expect sharp increase in operating costs in India

• What APIs Are Digital Financial Services Providers Opening?

• Digital Credit Helping to Put Kids in Classrooms in Cote d'Ivoire

• Cybersecurity for Mobile Financial Services: A Growing Problem

• CGAP National Surveys of Smallholder Households, CGAP, November 2018
• I-SIP Toolkit: Policy Making for an Inclusive Financial System, CGAP, November 2018
• High-Saving Youth in Smallholder Households: An Untapped Market, CGAP, November 2018