Credit delivery to large section of society very important for economic growth: CEA
Credit penetration or providing credit to a large section of the society is very important for economic development of the country, Chief Economic Adviser (CEA) K V Subramanian said on Thursday.
"This is the area where India has lagged behind. If you look at the private credit to GDP ratio at 58 percent, we are way behind many of the economies. OECD average is 160 percent," he said.
He said, in case of North East, this is as low as 20 percent, which is similar to sub-Saharan Africa.
Observing that fintech can help in improving credit penetration in the country, Subramanian said, "Technology-led growth will be where India will be most distinctive and different from the rest of the world, including the developed nations."
It allows financial institutions to understand whether a person pays back his loans in time or his credit history, he added.
He also emphasised the need to invest and use data-intensive modelling among banks and financial institutions not just for retail lending but also to widen the scope to include SME lending, corporate lending and large ticket lending.
The CEA urged banks and financial institutions either to build these data-analytical model themselves or join hands with fintech companies to provide credit to the retail sector.