Covid-19 to boost digital financial services growth; SBI, large private banks to benefit: Moody’s

The coronavirus pandemic will accelerate growth of digital financial services, benefiting State Bank of India (SBI) and large private sector banks, according to Moody’s Investors Service. Moody’s said digital financial services are rapidly growing in India. It observed that the Government’s efforts to boost financial inclusion and make the economy less dependent on cash have driven growth in the use of digital financial services, particularly electronic payments.

MSME lending

Given that micro, small and medium enterprises (MSMEs) have relied on informal lenders at interest rates as high as 30 per cent-35 per cent, almost twice as high as rates charged by banks, Moody’s said this has created an opportunity for digital lenders to target the unmet demand for financing among MSMEs. Moreover, Alternative lending is the second-most funded and one of the fastest-growing segments of fintechs in India. The country now has more than 300 lending start-ups and in the past six years, FinTech start-ups have raised about $10 billion in capital funding,