Connected Commerce Full Report

CREATING A ROADMAP FOR A
DIGITALLY INCLUSIVE BHARAT
Mastercard & NITI Aayog Knowledge Series
Knowledge Partner Research & Curation Partner
May 2021
CONNECTED COMMERCE: CREATING A ROADMAP FOR A DIGITALLY INCLUSIVE BHARAT MASTERCARD & NITI AAYOG
INSIDE THIS REPORT
1. From Vice Chairman, NITI Aayog 1
2. From the CEO, NITI Aayog 3
3. Note from the Session Chair 5
4. Foreword by Mastercard 6
5. Executive Summary 7
6. S1: Connected Commerce in Post-Covid India 13
7. S2: Helping MSMEs Survive and Thrive 24
8. S3: Enhancing Security and Trust 33
9. S4: Helping Agri Enterprises Thrive and Scale 40
10. S5: Robust Transit Systems for Smart Cities 51
11. Glossary 62
12. Acknowledgements 65
MESSAGE FROM
THE VC’s OFFICE
The world is becoming increasingly interconnected, thanks to rapid

technological advancements. A key aspect of the transformational role
of technology has been the provision of greater and easier access to
financial services to many. International Monetary Fund’s Financial Access
Survey, 2019, points out that the mode of banking across the world is
increasingly shifting to mobile and internet banking. In 2018, the value
of such banking transactions in low- and middle-income economies
rose to more than 200% of GDP, while in high-income economies,
digital transactions crossed 500% of GDP. Digital financial services are
also crucial for achieving the targets of Sustainable Development Goals
and improving the quality of life globally. But despite impressive gains
in mobile and internet banking, there remain gaps in access to financial
services for small businesses and others.
In India too, there is an increasing digitization of

financial services and consumers are shifting from
cash to cards and UPI. UPI transactions reached
Rs 3.3 trillion in September 2020, growing at nearly
100% y/y.
While digitization of financial services for those who already have access
to it is increasing at a fast pace, the issue that we face today is how to
increase overall access itself. Availability of credit to those with strong
creditworthiness and past credit history remains healthy. However, for
those with no history—especially micro, small and medium enterprises
(MSMEs) that are less likely to be eligible for loans on conventional
metrics—credit delivery remains a challenge. The government has been
promoting access to credit to MSMEs through various initiatives, such
as the MUDRA Scheme, the 59-minute-loan scheme, and the Credit
Guarantee Scheme. But data shows that overall credit from scheduled
commercial banks, especially that given to MSMEs, continues to grow
slowly.
Digital financial services span a spectrum of sectors. Not just limited to

credit, they offer many avenues for new kinds of business models. Recent
models related to e-commerce, shared mobility, peer-to-peer payment,
CONNECTED COMMERCE: CREATING A ROADMAP FOR A DIGITALLY INCLUSIVE BHARAT MASTERCARD & NITI AAYOG 1
delivery services, etc., have thrived on the back of consumers preferring
digital transactions over cash, which have in turn given a massive boost
to the digital trend. There is, however, an urban-rural divide here. The
penetration of internet and mobile technology in rural areas is low
relative to urban areas, and there is a need to focus on technologies
that can leverage this huge opportunity. This knowledge series touches
upon these issues and addresses opportunities and challenges related
to sectors such as agriculture, commerce, trade, urban mobility and
transport, and cyber security. These themes in totality cover the overall
landscape of the economy, in terms of rural and urban, and the sectors
that need digital disruptions to bring financial services to the last mile.
Mobility is an upcoming use-case for digital financial services. It can

be instrumental in enabling connected transit through interoperable
payment systems and improved solutions for faster and safer payments.
However, as we are more digitally integrated, the safety and security
of our networks and data are increasingly becoming key challenges.
From this perspective, it is crucial for the government and the relevant
stakeholders to deliberate on the strength and resilience of our digital
systems not just to protect consumers from frauds, but to also maintain
trust in financial services and the economy in general.
I hope this series will bring to the fore key issues in relevant sectors, how
digitization can help bridge the looming gaps and the steps forward to Dr. Rajiv Kumar
ensure a sound digital foundation to our economy. Vice Chairman, NITI Aayog
MESSAGE FROM
THE CEO’s OFFICE
The financial sector is undergoing a massive change. Banks have been
conventionally understood to be synonymous with credit and have been
instrumental in financing India’s credit needs over the past decades.
However, a dramatic shift was noted in the credit scenario in India in
the last decade. Continued deceleration in credit growth in the banking
sector created a gaping hole, which was filled by non-banking players
that could provide credit to the unbanked. Over the years, India has seen
tremendous growth in institutions such as micro-finance, NBFCs, and
small banks to facilitate better access to credit for the Indian industry.
These institutions have brought about an enormous change in how
credit is disbursed, with instruments like micro-loans, flow-based lending
and group-based lending that have been tried and tested successfully
and are now increasingly matching credit demand and supply. This
disruption is furthered by a flood of fintech players that are bringing
about transformational change in the way financial services are provided.
Making services like invoice discounting and KYC fully digital is game-
changing in comparison to the traditional ways of banking.
Digital technology will be the backbone of the

economy, going forward. Both products and
services - be it in retail, health, education, or financial
services - will increasingly have a digital as well a
physical aspect.
Already, customers are demanding digital solutions for even basic

needs. It is only inevitable that credit too will soon become a part of this
phenomena. Banks remain the major source of credit and will perhaps
continue to be so. While banks are showing tremendous progress
in breaking out of their old legacies by increasingly adopting digital
solutions, fintechs too have a great growing opportunity. Digital financial
inclusion will be a success only if we can provide seamless communication
between innovative financial solutions and industry. Fintech players have
a big role to play in the growth and development story of India, as credit
demand will increase manifold as the economy expands.
India’s private credit to GDP is the lowest among its peers. Countries
like China and South Korea have had tremendous growth and achieved
massive improvements in their living standards on the back of high
leverage. Even Vietnam’s recent development has been partially a result
of growth in its private debt. The credit scenario in recent years in India
has been less accretive to growth, and for a greater part a drag on the
economy. There is a growing need for our industry to be supplied with
the necessary liquidity. While the government has been successful in
enabling access to banking services and has given a massive boost in
recent years through the Jan Dhan-Aadhaar-Mobile trinity, much needs
to be done in making more financial services available to the newly
connected consumers.
Financial inclusion as a process depends on the regulatory environment

as much as it depends on the growth and structure of the financial
services industry. As new business models emerge to fill the current
gaps in achieving digital financial inclusion, the necessary regulations
must also be changed as and when required. The entire process will
require initiatives like this knowledge series to bring together all relevant
stakeholders such as banking and industry professionals, technology
solution providers, fintech players and regulators to bridge policy gaps in
the credit and finance sector.
We are living in an ever-changing environment. In the post-Covid era,

building resilient systems and encouraging business models that could
be change-makers of the future is crucial. It will also be important to make
sure that every individual is comfortable and confident about using digital
financial solutions. India is emerging as the hub of digital financial services
globally, with solutions like UPI growing tremendously and being hailed
as instrumental in bringing affordable digital payment solutions to the
last mile. Fintech players, alongside the conventional financial services
providers, hold the key to transforming the way the economy functions
and increasing access to credit for our industry. This will enable us to make
the Indian digital financial landscape convenient, safe, and accessible to Amitabh Kant
all. CEO, NITI Aayog
NOTE FROM
SESSION CHAIR
Financial inclusion has always been a critical goal of our government’s
economic policies. It has a crucial role to play in assimilating India’s
unbanked and underbanked population into the mainstream economic
system. Equal and affordable access to financial services can help reduce
poverty and income inequality. The convergence between banks,
telecom players, and technology companies is also strengthening the
drive for financial inclusion.
The Jan Dhan Yojana has been a strategic policy

initiative by the government to promote last mile
financial access to the unbanked in India.
The usual ‘banked’ criterion for financial inclusion is now set to undergo
a paradigm shift with a rise in connected commerce, online shopping,
e-marketplaces, and an ubiquitous mobile network.
This stakeholder analysis was conducted to discuss the demand and

supply side challenges and opportunities that have to be addressed to
advance digital commerce and promote financial inclusion. This series
encompassed discussions on diverse sectors such as MSMEs, agriculture,
safety and security in digital commerce, transit systems, etc., which are at
the forefront of digital transformation and can connect Indians in a way
that can eventually contribute towards an equitable development.
Ajit Pai
Distinguished Expert and Head,
Economics and Finance Cell,
NITI Aayog
FOREWORD
With economic activity showing signs of recovery, governments across the
world, particularly in emerging markets, are striving for economic growth
and financial inclusion. There is hope for inclusive growth, an improved
standard of living, lower unemployment, and a movement towards a
more equal society. More than ever before, all of these now rely on digital
infrastructure to thrive.
The COVID-19 pandemic alerted us all to the fragility of cash and the
resilience of digital technologies, including digital payments. The past
year saw low-value digital transactions surging across India as consumers
switched from cash for everyday purchases—online and offline—amidst
growing health and safety concerns. Smaller cities and towns contributed
two-thirds of e-commerce demand.
Digital has shown us the way to redefine successful inclusive growth. By

bringing millions of people into the digital and financial mainstream, we
enable them to access financial services, including cheaper credit to help
small businesses grow. Further, digital payments are the synovial tissue
that connects rural and urban India.
We must build digital systems for underserved

communities so they can access services, and better
control their future.
In an interconnected world, interoperability is key to financial inclusion,

else we risk creating islands of success. Inclusion won’t happen if we
don’t integrate everyone into existing systems and provide them new
experiences and opportunities. Technology creates opportunities, but also
risks widening the gap. If we simply digitize tools without extending them to
those outside the system, we risk having an Internet of Everything without
the Inclusion of Everyone. There are three things the world needs to do to
bridge the divide: improve access and affordability; build infrastructure in
rural areas; and educate people on how to use technology. This cannot be
achieved by governments alone: it needs public-private partnership.
This report delves into how Connected Commerce can help balance the
trinity of problems that we are all dealing with: inclusion, environmental
sustainability and the trade-off between the short vs long-term goals we
are striving towards. It aims to draw out key elements of a roadmap that
India can take to its next level of digital transformation, driven by providing
real value to the next half billion who go online in the next three years.
Ari Sarker
In a bold new world emerging from disruption by the pandemic, digital Co-President, Asia Pacific
payments will be a key pillar on which a self-reliant India will stand. Mastercard
EXECUTIVE
SUMMARY
Between October and November 2020, Mastercard and NITI Aayog

organized a series of five discussions that served as virtual sectoral
interfaces for “Connected Commerce: Creating a Roadmap for a Digitally
Inclusive Bharat”—aiming to promote digital financial inclusion, and
confidence in electronic payments.
The roundtable participants included government leaders and experts

from banks, the financial regulator, fintech enterprises and various
ecosystem innovators. Conversations spanned areas around accelerating
digital financial inclusion (DFI), enabling global opportunities for MSMEs,
inspiring trust and security in digital commerce, preparing India’s agri-
enterprises for connected commerce, and building robust transit systems
for smart cities.
The central questions discussed were:
1) How to accelerate digital financial inclusion of the underserved

sections of the society?
2) Which confidence-building measures will enable MSMEs towards

‘getting paid, getting capital and going digital’?
3) How to move the needle on cyber security concerns from being

seen as a purely “awareness issue” to looking at policy and
technological interventions that can foster trust and increase cyber
resilience?
4) Which interventions can unlock the promise of digitization in India’s

agriculture sector?
5) Which are the essential elements of a digital roadmap towards

accessible transit for all citizens, including the poor, underserved and
travelers/workers from other cities?
HIGHLIGHTS FROM THE SESSIONS
1. Accelerating the Next Phase of

Digital Financial Inclusion
We have seen a lot of effort and much success on the supply side of DFI:
in e-governance, the JAM trinity, in GST (goods and services tax). Most
bank or digital accounts can be credited through the government’s Direct
Benefit Transfer (DBT) schemes, or transfers from employers, or peer-to-
peer transfers. However, the break in the digital financial flow comes at the
last mile, where account holders mostly withdraw cash for their end-use.
For market players, it is critical to address this gap on the demand side
by creating user-friendly digital products and services that encourage the
behavioral transition from cash to digital.
Key inferences from this session:
To strengthen acquisition infrastructure needed for double-sided

growth of digital commerce (whether merchants or consumers):
• Increase innovation and investment in the acquisition space,

encouraging non-banks to build acceptance infrastructure
- Allow for the adoption of more automated infrastructure

developments, such as interoperable QR
-
Allow payment schemes to induct non-banks as associate
members
NBFCs can be enabled to participate more freely in the payment

ecosystem through specific measures, such as:
• Issuance of credit cards
• Allowing for OTP based mandates, e-KYC and other services to

be provided similar to banks
Facilitating the adoption of aggregator-based models around

challenges such as providing credit, lending, etc., in moving India to
an open banking/finance ecosystem. For example:
• Permitting a regulatory sandbox model on aggregator platforms

in the credit and lending space tested in a pilot mode. For e.g.,
RBI’s regulatory sandbox (whose third cohort, focuses on MSME
lending, could allow for such models to be developed)
2. Enabling Global Opportunities for MSMEs
MSMEs have been a key growth driver for the Indian economy. A GAME
Task Force report of June 2020 highlights that the category employed
some 110 million people, or over 40% of India’s non-farm workforce. The
widespread inability to access formal finance is a common pain-point
of India’s heterogeneous MSME landscape. Increasing the credit flow
to MSMEs is pivotal to GDP growth. The lack of proper documentation,
bankable collateral, credit history and non-standard financials force them
to access informal credit at interest rates that are double of those from
formal lenders.
Key inferences from this MSME session were:
Streamlining and digitizing registration and compliance processes,

tax filings, software wizards, central inspection system and single
window clearance would nudge this ecosystem toward more
formalization
For supply-chain financing to grow, more sources of credit need to be

enabled for MSMEs. Suggested measures:
• Equip better data-driven models around transaction tracking and

supporting micro-merchants in credit access
• Enabling conditions for fast-tracking a loan service provider’s

framework
• Allow ease of adopting AI, data analytics and blockchain to

provide quicker financing to suppliers
3. Inspiring Trust and Security in Digital Commerce
With the tremendous growth in digital payments in the past few years,
companies are putting customer experience at the front and centre.
However, security cannot be left behind, especially given the fact that 500
million users will have access to internet in the next few years. This surge
in digital transactions has increased the risk for possible security breaches,
both for consumers and businesses. We must ensure that India’s inclusive
digital financial system is protected against frauds and security breaches
for both consumers and business.
Key inferences from the trust and security session were:
A whitelisting approach can be developed on verified contact

origins—phone numbers or top-level domains (TLDs) of banks—to
avoid risks of phishing (where sensitive personal data is obtained via
disguised means)
The use of sophisticated automated models (AI, ML) to reduce

friction should be encouraged in real-time models that track device
signals and patterns. A harmonized set of industry standards that
is interoperable must be in place, whether it is behavioral biometrics,
locking device or SIM, etc.
4. Preparing India’s Agri Enterprises for
Connected Commerce
Agriculture, with its allied sectors, provides livelihood to a large section of

the Indian population. Over the years, agriculture’s contribution to national
GDP has declined from 34% in 1983-84 to just 16% in 2018-19. Farmers
face myriad challenges, such as access to markets, information, inputs,
financial services, expert advice, etc. Most agri-techs have not succeeded
in digitizing financial transactions for farmers or enabling formal credit at
lower rates of interest by leveraging transaction data.
Key inferences from this session were:
Digitization of land records in a timebound manner, aggressive

efforts to improve institutional credit delivery through technology-
driven solutions to reduce the extent of financial exclusion of
agricultural households, enabling agricultural NBFCs to access low-
cost capital to extend farm credit at competitive rates
Digital infrastructure should be built to help commercial banks

acquire new customers at reduced cost and provide solutions
spanning all stages of the agri value chain
Need for a hybrid ‘phygital’ model to achieve digitization outcomes

in the long run. To decide which service to use and what is the right
price to pay for that service cannot be left to the farmer alone.
Along with digitization of the value chain, inclusion programmes must
be undertaken to ensure that farmers are trained to use that
technology
5. Robust Transit Systems for Smart Cities
Mass transit is the backbone of developed economies. India needs

systems that allow citizens to access transit seamlessly. Today’s proprietary
cards give discounts and benefits to those who pay up front, while poor
customers spend time in queues for more expensive single-ride tickets.
Minimizing queues and crowds is important as the world recovers from the
Covid-19 pandemic.
Can we support payment with popular platforms that build on what

customers already use (bank accounts, payment apps, contactless cards)?
With the transport sector expected to grow to 12% of GDP by 2026, there
is a huge opportunity for the government and private sector to collaborate
and provide top-quality systems for mass transit by improving the overall
customer experience.
Key inferences from the transit session:
Make city transit seamlessly accessible to all, including visitors,

migrant workers from towns or villages, minimize crowding and
queuing, post pandemic. Allow price benefits of digital payments to
poor citizens
Leverage existing smart phones, cards and non-transit payment

modes as far as possible. Instead of (or in addition to) a new transit
card, support payment apps using wallets and UPI via NFC and QR
codes, and existing contactless debit and credit cards. Many transit
commuters have smart phones. A smartphone-based app where a
commuter can just enter the destination, generate a QR code and use
that to enter the transit system could be another option. Ultimately,
aim for an inclusive, fully open system like the London ‘Tube’
To onboard new customers digitally and expedite their transition

from cash to digital, the government and industry should incentivize
the customer
A very successful example and use case is that of

FASTag, now virtually a mandate on vehicles for
highway tolls, via a mix of incentives and penalties.
Another mega success story outside transit is UPI,
and it is worth leveraging that for transit via phone
apps.
Session 1
ACCELERATING THE
FINTECH ECOSYSTEM FOR
CONNECTED COMMERCE IN
POST-COVID INDIA
The roundtable participants included
representatives from the government, banks,
financial regulator, fintech enterprises and various
ecosystem players and innovators. The conversation
spanned themes such as: last-mile infrastructure
push for boosting digital commerce, fixes needed
for an efficient supply-chain financing environment,
pivoting towards aggregation models, and drawing
up level-playing-field conditions between banks and
NBFCs.
Context: Financial inclusion has always been a key pillar of the Indian
government’s economic policies. Initiatives such as the Jan Dhan-
Aadhaar-Mobile (JAM) trinity are game-changers that have ensured
equal and affordable access to financial services for India’s unbanked and
underbanked population, thereby reducing income inequality.
Financial inclusion, as a key policy imperative, entered the banking lexicon

in 2008, courtesy the recommendations of the Rangarajan Committee.
Faster implementation of financial inclusion plans (FIPs) was seen
after 2010, as commercial banks opened new rural branches, and with
increased coverage of villages with ATMs and digital kiosks, more banking
correspondents, opening of no-frills accounts, and the provision of more
credit through credit cards (Kisan and general). The progress was evident
on the Global Findex (GFX) measure at World Bank, as India progressed
from a score of 35 in 2011 to 80 in 2017. The JAM trinity has played a crucial
role in helping India improve across major indicators with the percentage
of account holders (over 15 years of age) rising to 80% in 2017 from 35% in
2011. However, formal savings at a financial institution increased by only 8%
from 12% in 2011 to 20% in 2017. Many people continued to use informal
channels for savings.
India has grown significantly across major G20 Financial Inclusion
Indicators from 2011 to 2017
90
80
70
60
50
40
30
20
10
0
Account Account, Branches Made or Received Saved at
(%, age female per 100,000 received wages or a financial
15+) (%, age adults digital government institution
15+) payments in transfers into (% age 15+)
the past year an account,
(%, age 15+)* female (% age
15+)*
2011 2017
Source: World Bank, https://datatopics.worldbank.org/g20fidata/country/india, *Data not available for 2011
‘Digital financial inclusion’ (DFI) refers to the use of digital financial services
to advance financial inclusion. These include payments, transfers, savings,
credit, insurance, securities, financial planning and account statements.
They are delivered via technology, such as e-money (initiated either online
or on a mobile phone), payment cards and regular bank accounts.
In addition, the convergence between banks, telecom players and

technology companies is paving the way for higher integration and
innovation, important facets to streamline financial inclusion. The usual
‘banked or unbanked?’ criterion for financial inclusion is set to undergo a
paradigm shift, with a rise in connected commerce, e.g. online shopping,
e-marketplaces and mobile telephony.
Session Objectives:
Discuss ways to accelerate digital financial inclusion,

especially of the underserved sections of society
Explore innovations in the ecosystem that are driving

digital commerce in the Post-Covid climate
Share global best practices in financial inclusion that

India could embrace
Discussion Point 1: Digitizing Last-Mile
Service Delivery
So far, efforts on the supply side of DFI have seen manifestations either
in e-governance, the JAM trinity or GST systems. In the current system,
most bank or digital accounts can be credited through government’s DBT
schemes, or transfers from employers, or through peer-to-peer transfers.
However, the break in the digital financial flow comes at the last mile
where account holders have to withdraw cash or write physical checks for
their end use. For market players, it is critical to address this gap on the
demand side by creating user-friendly digital products and services that
encourage behavioural transition from cash to digital. For the government,
it is essential to incentivize small businesses, consumers, and merchants
for the digitized last mile.
The 2018 Reserve Bank of India (RBI) High-Level Committee Report on

Deepening Digital Payments underscored the importance of expanding
acquisition infrastructure across the country. Growth of acceptance
infrastructure can replace cash-out networks, help reduce cash holdings,
and aid digital transition. Acceptance infrastructure includes last-mile
points that accept and support customer payments made via mobile
phones, cards, bank accounts, and comprise dedicated point of sale
(PoS) devices, mobile PoS apps, and QR-code systems, inter al. A strong
acceptance infrastructure is a critical parameter of DFI, as it ensures
merchants have the capacity to accept digital payments and also supports
the transition from cash to digital payments.
Current Scenario: Recent steps by the regulator RBI in operationalizing

the Payment Infrastructure Development Fund (PIDF) support the
recommendations of this report. It envisages the creation of 3 million
new touch points every year (1 million physical PoS devices, and 2 million
digital—QR code or soft PoS). The regulator has prescribed a subsidy of
30-50% of the cost of physical PoS and a 50-75% subsidy for digital or
soft-PoS for the payment acceptance points deployed as part of this Fund.
Interoperable QRs: Bharat QR and BHIM UPI QR are
examples of QR codes standardized to promote
digital payments among merchant establishments,
e-commerce and m-commerce entities. In 2020,
Pine Labs, an Indian unicorn start-up and merchant
platform launched its paper, POS. It is an all-in-
one solution for merchants to accept multiple
forms of UPI and Bharat QR payments through a
single merged static QR code at the point of sale,
providing an alternative to traditional, standalone
PoS terminals for grocers, departmental stores, taxi
services, unmanned kiosks, etc. Similarly, Paytm and
others use UPI QR to accept payments from their
own apps and other wallets’ UPI-supporting apps.
Key Inferences: To strengthen the acquisition infrastructure required

for double-sided growth of digital commerce (both merchants and
consumers):
Allow market-driven models to determine interchange fees
Increase innovation and investment in the acquisition space,

encouraging non-banks to build acceptance infrastructure
Allow for the adoption of more automated infrastructure

developments, such as interoperable QRs
Encourage payment entities to develop solutions such as offline

payments, near-field communication (NFC) and SoftPoS, card-on-file,
cloud tokenization, etc
Allow payment schemes to induct non-banks as associate members,

and thereby become active members of the acceptance ecosystem
To strengthen payment infrastructure,

RBI’s PIDF fund will help create 3 million
new acceptance points every year in Tier-
3 to Tier-6 locations, with PoS hardware,
QR code and soft-PoS.
Discussion Point 2: Driving Supply-Chain Financing
Supply-chain financing (SCF) services could help fill the credit gap for
MSMEs (micro, small and medium enterprises) in a cost-effective and
efficient manner. SCF consists of several options that aim to finance
suppliers by using invoices and receivables as interim collaterals. One
reason SCF has not picked up in India is the largely ‘dealer-based financing’
mindset.
Two common SCF methods are factoring and reverse factoring. Factoring
is a financial transaction where suppliers sell their accounts receivable to
a third party (a bank or fintech) at a discount. Reverse factoring is also an
accounts receivable financing mechanism, but in this case the transaction
is initiated by the buyer.
One of the panelists highlighted two key reasons for the slow adoption of
SCF in India: onboarding MSMEs digitally, and getting buyers to accept
receipts on a digital portal for SCF.
Banks have traditionally preferred offering working capital loans over

supply chain-based financing due to lack of borrower data and difficulty in
assessing the collateral provided. However, the growth of SCF could ease
access-to-credit challenges for India’s MSME sector. This could bundle well
with the MSME Champions initiative which aims to help MSMEs capture
new opportunities in manufacturing and services sector.
The RBI has also approved of and backed TReDS (Trade Receivables
Discounting System), a digital initiative for SCF, where MSMEs can get
their invoices factored. Only banks and NBFC-Factors can be part of the
TReDS platform today, and an amendment in Factoring Regulation Act is
required to bring other NBFCs into the fold. The government has already
taken the initiative to amend the Act, and this is likely to happen in 2021.
Bringing NBFCs into the fold will boost SCF options for MSMEs registered
on the TReDs platform.
Key Inference: With these developments and with the MSME
Ministry constituting five task forces around areas such as
Industry 4.0, exports and integration of technology centres, a
sixth task force in public private partnership (PPP) mode may be
required to address SCF challenges and allied issues.
This SCF task force could look at providing a roadmap on the following
aspects:
Innovative solutions for MSME financing and

underwriting, which leverage non-traditional data to
establish credit histories
Models for providing early-stage financing
Allowing a transition to rating-based models for data-

driven credit risk assessments
Proposing support measures for SCF to flourish
A more detailed perspective on SCF has been laid out in the Session 2
overview below.
Discussion Point 3: Pivoting Toward

Aggregator-Driven Models
Aggregator platforms can be a powerful mechanism

for solving a variety of financial inclusion challenges.
For example, the Indian start-up Urban Company
aggregated 30,000 individual workers/service
providers (plumbers, electricians, carpenters,
beauticians, etc.) across 18 cities. It was able to
seamlessly provide credit/interest free loans, etc.,
to professionals on the platform with no formal
credit scores.
Similarly, Sahamati is an account aggregator ecosystem collective. It aims
to create a new kind of digital data model wherein account aggregators
(a type of NBFC regulated by the RBI) will act as data intermediaries
between users and entities that are the primary owners of data, as well
as banks, financial institutions, and NBFCs that maintain and manage it.
The account aggregator architecture is built to help individuals and small
businesses avail credit easily by allowing lenders to assess their credit risk
based on their personal data with their consent.
Key Inferences: Pivots towards aggregator-based models can

be increased further to solve for challenges such as providing
credit and lending and moving India to an open banking/finance
ecosystem. Some specific measures could be:
Permitting a regulatory sandbox model on aggregator

platforms in the credit and lending space, tested in pilot mode.
The third cohort of RBI’s regulatory sandbox, focused on
MSME lending, could allow for such models to be developed.
NITI Aayog’s Data Empowerment and Protection Architecture

(DEPA) could be a suitable template to allow fintech to co-
create new account aggregator enterprises that address
various segments—credit, lending, and other aspects.
Discussion Point 4: Creating a Wider Digital

Financial Ecosystem
NBFCs currently account for 20-30% of the overall credit given in the
system. For non-banking entities to play a stronger role in digital financial
inclusion imperatives, they must be given equal footing in the system.
NBFCs are practically constrained from the credit card market on account
of high access barriers, especially regarding the issuance of general credit
cards. They are barred from issuing variants of other cards, like charge
cards, debit cards, and stored value cards.
Panelists recommended a level playing field with respect to issuance

of credit cards, e-KYCs (online identification or ‘know your customer’
verification process) and OTP (one-time password) based mandates. This
would help deepen financial inclusion via improved credit culture in India.
A level playing field for NBFCs and banks
with respect to issuance of credit cards
and e-KYC will deepen credit culture and
financial inclusion.
NBFCs
BANKS
Non-banks have entered the market and expanded the range of payment
services available to the Indian consumer, backed by their strength in
technology and customer-centric innovation. Banks and non-banks are
partnering to offer the combination of trust (banks) and innovation (non-
banks) to the Indian consumer. This “best of both worlds” approach should
be allowed to flourish. Credit cards are a key instrument for the growth of
digital payments in India.
Current Scenario: A 2013 Master circular from RBI allowed the issue of co-
branded cards by NBFCs under certain conditions. The Central KYC (know
your customer) Registry Operating Guidelines, 2016, mandates that every
reporting entity must capture an individual’s data as per the common
KYC template and upload it on the CKYC registry, along with a scanned
copy of the supporting documents. Lending through OTP-based e-KYC
authentication under RBI’s KYC Master Direction is currently capped at Rs
60,000.
Key Inferences: NBFCs should be enabled to participate more
freely in the payment ecosystem through specific measures:
Issuance of credit cards
Allowing for OTP-based mandates, e-KYC and other services,

similar to banks
There should be an increase in the limits for loan accounts

permitted under OTP-based e-KYC onboarding. The limits
for credit cards issued under the same process should also be
increased commensurate to the average loan ticket sizes via
digital modes (Rs 3,00,000).
Smaller NBFCs should also be promoted at the regional level

for better outreach
Discussion Point 5: Ensuring Safe, Secure and

Reliable Digital Financial Environment
As we get more digitally integrated, we must evaluate the strength and

resilience of digital payments to not just protect consumers from frauds,
but to also maintain trust in financial services. Public–private collaborations
are key to a post-Covid era for innovations in this ecosystem. For instance,
all card networks are working together with regulator RBI on a ‘Risk Forum’
toward protecting consumers and merchants. Collaborative initiatives like
these between private and public sector entities are essential to ensure a
safe and reliable financial environment.
As new users join digital payment systems, they need a good experience,
to continue using these avenues. Any failures will result in setbacks. When
users lose confidence in digital payments, they build backups (cash in
hand), or move back to cash.
Trust is a critical challenge as many citizens want to be assured that the money
in their accounts is safe and that they are being offered an appropriate
range of products. There is a FI Insights Wave IV survey that illustrates how
women prefer banking with female business correspondents and bankers.
For PMJDY account holders, a deal-breaker is the overall experience of
banking—giving up on daily wages to go to a bank and subsequently wait
in a queue for their turn—and not just safety. Financial inclusion products
need to embed not just access and trust but efficiency as well.
Current Scenario: The Committee on Deepening Digital payments note

that failure rates have not been published by the RBI. So far, we mostly
have anecdotal evidences that demonstrate the need and possibilities of
improvement to build trust in digital financial systems.
Key Inferences: Increasing customer confidence and trust while
accessing financial services can be undertaken through a slew of
measures:
Making bank accounts coterminous with some form of

insurance protection against frauds (up to certain amounts)
Swifter grievance redressal mechanisms and quality of service

(QoS) measures on payment failures:
- Requiring payment operators to implement an online

dispute resolution, with prescribed time limits (15–20 days)
- Periodic user surveys by RBI or its associated bodies, on

digital payments adoption and attitudes
Some insurance against frauds and thefts

for the money in bank accounts would
encourage consumers to transact more
digitally.
Session 2
ENABLING GLOBAL
OPPORTUNITIES
FOR MSMEs THROUGH
CONNECTED COMMERCE
The round-table participants highlighted the lack
of formalization and the need for data-driven
approaches to innovative financing as key challenges
in the MSME ecosystem. The conversation spanned
themes such as reforming P2P lending and the need
to grow supply-chain financing to enable more
sources of credit for MSMEs.
Context: MSMEs have been a key growth driver for the Indian economy. As
per a GAME Task Force report of June 2020, enterprises in this category
employ approximately 11 crore people, which is more than 40% of India’s
non-farm workforce. Businesses in this sector have also been a critical
enabler of distribution and supply chain for larger companies, contributing
nearly 25% towards India’s services’ GDP and 33% towards manufacturing
output.
INDIA’S MSME SECTOR
People employed Contribution to non- Contribution to Contribution to

farm labor workforce Services GDP Manufacturing GDP
11 Crore 40% 25% 33%

Source: GAME Task Force Report on “Improving Economic
Dynamism and Accelerating MSME growth”, June 2020.
The widespread inability to access formal finance is a common pain-point

of India’s heterogeneous MSME landscape. Increasing the credit flow
to MSMEs is pivotal to GDP growth. The lack of proper documentation,
bankable collateral, credit history and non-standard financials force them
to access informal credit at interest rates that are double of those from
formal lenders.
Banks remain the most important source of external finance to MSMEs.

But banks limit their loan exposure to MSMEs, because they have a
higher perceived risk of non-performance, limited available performance
or credit data, and low ability to provide security collateral. Most Indian
MSMEs do not have audited financial statements to present with their loan
applications, or adequate, ready collaterals. Consequently, most MSMEs
end up relying exclusively on expensive and uncertain informal funding
sources.
The GST regime drove in a degree of MSME formalization. Applicable
to enterprises with a turnover of Rs 20 lakh and above, GST catalyzed a
formalization wave among the erstwhile micro and small enterprises by
compelling them to file returns based on their sales and trade data. Over the
last two years, GST registrations have generated a large pool of data that can
be analysed to provide credit to these businesses.
Challenges and critical impediments to reviving MSME growth include

access to credit, inventory management/logistics and economic and
financial uncertainty in the current Covid-triggered crisis.
Access to credit has been a top challenge for SMEs
Outcome of efforts to seek

Why proposals were rejected alternative sources of trade
financing by SMEs
(% of responses)
Lacked additional 20 Unable to find appropriate 47

collateral alternative financing
Completely unsuitable 19 Used informal financing 18
for support
18 Used formal alternative

Serious KYC concerns 16
financing successfully
Poorly presented and had Found formal alternative
17 10
insufficient information financing but opted not
to use it
Not profitable enough 15
to process Found informal financing
7
but opted not to use it
Not profitable to 11
process due to Found digital finance
regulatory capital but opted not to use it 1
constraints
Used digital finance
successfully 1
Source: ADB 2019: Trade, Finance Gaps, Growth and Job Survey
Session Objectives:
Identify the pain-points for small and medium businesses

towards better integration and formalization into the
MSME ecosystem
Look at ways of increasing access to credit for such

businesses
Build confidence to enable MSMEs to go digital
‘Get Paid, Get Capital,
Get Digital’: Charting
a New Growth Path for
MSMEs
The round-table participants included representatives from government,
banks, payment enterprises, MSME councils and foundations. The
conversation spanned themes such as MSME financing, P2P lending,
efforts towards more formalization and evolution towards better data-
driven approaches to spur credit access for small and medium businesses.
Discussion Point 1: Paving the Way for a

Formalized Ecosystem
MSMEs come under a distinct legislative framework (Micro, Small and

Medium Enterprise Development Act, 2006) vis-à-vis retailers and traders,
who are governed under a separate regime by the Ministry of Commerce
(Department for Promotion of Industry and Internal Trade). Therefore,
policy ask and approaches must be framed accordingly, whether directed
at MSMEs, retailers, traders or street vendors. The government has been
open to suggestions and is cognizant of the present realities wherein
disruptions brought about by the pandemic merit more collaborative
approaches between different stakeholders.
Current Scenario: The MSME Ministry wants to locate 500 Champions as

role models for India among various sectors. The Champions initiative aims
to promote a unified, empowered, robust, bundled and technology-driven
platform for helping and promoting MSMEs, whether in manufacturing or
services.
Panelists highlighted the low extent of formalization as a key impediment.

Few MSMEs are within the ‘formal net’, as seen in the number of firm-
level GST filings. The Emergency Credit Line Guarantee Scheme (ECLGS)
steered by SIDBI has been a key initiative during Covid-19. But it needs
to be seen how this can be expanded further and how we can augment
priority sector lending. For example, how can we look at expanding the
GeM (Government e-Marketplace) platform?
Panelists from banks highlighted the need to identify impediments around

the larger formalization of the MSME fold—issues such as collateral or
credit history. Rural areas have growth potential on the micro and small
segment side: however, more hand-holding is required on this front.
Excess paperwork and filings for compliance has been
a major impediment to formalizing MSMEs
23+
Number of
registrations
for a firm
750+
Compliance
requirements
(on average)
Number of ﬁlings
per annum (average)
120+
Source: GAME Task Force Report on “Improving Economic Dynamism and Accelerating MSME growth”, June 2020.
Creating digital systems that simplify business registration is an imperative

demand. The government’s Business Reforms Action Plan (BRAP), a joint
initiative of the commerce and finance ministries, also outlines the need
for a single window flow on both registration and compliances.
Global Best Practice: Singapore’s TradeNet is a

platform where traders submit electronic data to a
single-window to obtain all necessary import/export-
related permit/certificate and customs declarations.
It has been acknowledged as one of the primary
reasons for Singapore’s success on the Ease-of-
Doing Business index. In Malaysia, the SME Plan
allows for Integration of Business Registration and
Licensing to create a single registration point.
Key Inference: Streamlining and digitizing registration and

compliance processes like labor compliance, EHS (environment,
health and safety) filings, tax filings, information wizards along
with a central inspection system and a single window system
could accelerate the formalization of this ecosystem. In this
regard, we could look at:
One online registration platform in line with BRAP
A single place/window to apply for all compliances, submit all

information and documents
Discussion Point 2: Shifting Toward
Digital Lending
With the rise in internet usage and smartphone penetration, financial

services firms are looking at more aggregated solutions around digital
lending models driven by cutting-edge technologies such as AI, ML and
rating-based models. Digital lending has some inherent advantages over
traditional lending, such as faster approval of credit, use of alternative data
to assess creditworthiness, and operating cost efficacy.
Current Scenario: The digital lending market is expected to grow to $100

billion by 2023. As digital lending matures with innovative models such
as point-of-sale financing, invoice discounting exchanges, and buy-now-
pay-later, we should look at how we can drive the next phase of digital
consumer lending.
There have been recent concerns in India stemming from an increasing

number of unauthorized digital lending platforms that provide a promise
of quick loan disbursement. RBI did issue a clarification that such digital
lending platforms, which are used on behalf of banks and NBFCs, must
disclose the name of the bank or NBFC upfront to the customers.
Governments in countries like the UK have backed the peer-to-peer (P2P)

lending model and have been active participants in platforms like Funding
Circle and Zopa. Regulators in the US have staunchly supported P2P
systems and have come up with measures to safeguard the industry.
A Medici report from 2020 says that India has over 19 P2P lenders which
have facilitated over Rs 500 crore in loans. This space is highly regulated
by the RBI, where all the platforms registered with it are categorized as
NBFC-P2P entities.
Key Inference: P2P lending is a sunrise space in the Indian
financial ecosystem. While regulator RBI has relaxed P2P lending
norms over recent years, some measures to bolster this area
could include the following:
Measures to encourage electronic contracting for

P2P transactions. This would save the hassles of filing
and record keeping and pave the way for borrowers
to honor their loan commitments legally
Compliance requirements can be strengthened for

mandatory reporting on payment defaults. This would
provide a holistic picture of creditworthiness
Discussion Point 3: Need for Growing Supply

Chain Financing
Several panelists highlighted the lack of data in understanding the

segmentation of various MSME categories (very small vs large businesses),
the incentives needed in the system to encourage retailers to go digital, and
the issues around the lack of data, leading to only 10% of small businesses
having access to formal credit.
Supply-Chain Financing (SCF) provides opportunities for lenders to extend

microloans and creates new opportunities for businesses.
Multiple forms of credit sources will

go a long way in reducing the sector’s
over-reliance on informal credit.
The benefits to the ecosystem in diversifying credit sources are:
Increased sale of additional stock purchased using credit
Access to banking and financial services
Room for incentives, such as subsidizing loan insurance for entities

servicing MSMEs
Reduction of risk and operational cost of handling cash
Potential for cross-selling benefits for the bank, such as access to

personal credit
While the government has taken some steps to reduce the sector’s
over-reliance on informal credit channels, it will see the light of the day if
licensed access to Account Aggregators and GSTN (Goods and Service
Tax Network) are made available to qualifying fintech entities for efficient
and seamless loan disbursal to MSMEs and retail borrowers. This would
help in formalizing platforms for MSME credit delivery.
In India, the Open Credit Enablement Network

(OCEN), recently unveiled by iSPIRT Foundation,
democratizes ‘credit rails’ on some of the aspects
connecting lenders with marketplaces. In the United
States, the Small Business Administration authority
onboards non-banks as lenders under the federal
paycheck protection program as part of COVID
recovery efforts.
Data-driven models in the MSME

ecosystem can help grow supply chain
financing.
In Singapore, banks like DBS exemplify a new breed of SCF providers who
are leveraging the newest technologies—APIs (application programming
interfaces) and blockchain—to provide financing more quickly to suppliers.
On the supply-chain financing side, the push has been mostly on the buyer
side, with very little work on the dealer or sales side.
Key Inference: For supply-chain financing to grow, more sources

of credit need to be enabled for MSMEs. Some measures in this
regard could be:
Equipping better data-driven models around transaction

tracking and supporting micro-merchants in credit
access via all financial institutions, including banks.
Allow ease of adopting AI, data analytics and

blockchain to provide quicker financing to suppliers.
Enabling conditions for fast-tracking a loan service

provider’s framework (such as LSP licences and seamless
loan disbursal).
Session 3
INSPIRING TRUST AND

SECURITY
IN DIGITAL COMMERCE
The conversation spanned themes such as
trust and security of digital payments, need for
institutionalizing PPP mechanisms around threat
monitoring/intelligence, and more design-based
interventions of a secure customer onboarding
process.
Context: In India, digital transactions have increased at a CAGR of 61% and

19%, in terms of volume and value, respectively, between fiscal 2014-15 and
2018-19. In fiscal 2014-15, digital transactions were valued at 660% of GDP.
In 2018-19, this number increased to 862%. This growth in digital payments
is great for the consumer as companies innovate on putting customer
experience front and center. However, security cannot be left behind,
especially for the next 500 million users who will go online in the next few
years. This surge in digital transactions has increased the risk vectors on
possible security breaches, both for consumers and businesses. We must
ensure that India’s inclusive digital financial system is protected from risk
vectors like security breaches for both consumers and businesses.
A Medici report of June 2020 says 40,000 cyber-attacks targeted the IT

infrastructure of the banking sector in India. In August 2018, Cosmos Bank
faced a cyber-attack, resulting in nearly $14 million being siphoned off.
In another incident, Canara Bank ATM servers were hacked and $27,000
siphoned off from over 50 victims.
Several measures by the RBI, especially around tokenization, consent-

based function for Card Not Present (CNP) transactions, Turnaround Time
(TAT) framework, creation of a Central Payments Fraud Registry, have
been welcome steps in instilling consumer confidence and laying out the
necessary security upgrades.
With digital transactions spiking, cyber frauds keep

pace as first-time users come on board
Cyber incidents reported at CERT
Source: AMCHAM and FTI Consulting White Paper on ‘India’s National Cybersecurity Strategy’
Session Objectives:
Discuss policy and technological interventions for

cyber-security concerns to increase resilience
Build trust while ensuring seamless transaction

experiences
Explore the role of emerging technologies (AI, ML)

in countering frauds
From Caveat Emptor to

Caveat Vendor?
“Security First” Design
Approaches for
Frictionless Commerce
Discussion Point 1: Securing User Trust on Digital
Payments’ Use and Experience
Covid-19 may have led to an increase in phishing and identity thefts, but
that wasn’t unique to the pandemic period. A panelist highlighted how
large-scale financial frauds occur due to vishing (social engineering)
attacks. Several panelists highlighted the need for stronger mechanisms
to tackle such vishing attacks, whether by way of better fraud analytics or
more robust information sharing.
In sessions 1 and 2, too, the issue of trust and security in digital payments
was highlighted. Transaction failures and reliability concerns, whether with
m-wallets (PPIs), UPI or its TPAPs (third-party application providers), or
other instruments, have been a key challenge. The report by RBI’s High-
Level Committee on Deepening Digital Payments notes that transaction
failures cause poor consumer experiences.
The critical challenge has been to develop enough friction for fraudsters
when they try to run fraudulent campaigns or cyber-attacks. One way
to do so is by signals or entire attribute history to create friction against
fraudsters. Moreover, a centralized repository of fraudsters, where all
companies and customers can flag suspicious details for everyone’s benefit,
was suggested as a possible approach on information exchange around
threat intelligence. Another set of suggestions centered around payment
platforms developing more visually explicit warnings or labels for users,
such as creating multiple suspicion screens. The efficacy of developing
scenario-based modeling exercises in the customer onboarding process
was also highlighted.
Information sharing systems such as

a fraud repository can be an effective
threat intelligence mechanism to tackle
cyber-attacks.
Online platforms can carry labels or

warnings for alerting consumers to the
risk of frauds.
Key Inferences:
A whitelisting approach can be developed on verified contact origins,

whether phone numbers or top-level domains (TLDs) of banks, in
ensuring mitigation of phishing (a type of fraud where sensitive
personal data is obtained via disguised means) risks. A repository of
fraudsters should also be in place to ensure both payment enterprises
and end customers can flag suspicious numbers and activities.
Whitelisting is a fairly commonplace approach organizations follow as

a cyber-security practice wherein administrator-level safeguards are
put in place to allow only for an approved set of applications that can
be organized within an internal network, whether from a computer or
mobile device.
RBI maintains the Sachet portal (sachet.rbi.org.in) to
facilitate information sharing on illegal or fraudulent
deposit schemes. The website also provides an
investor awareness section, along with a whitelist of
registered entities such as licensed NBFCs.
User experience (UX) interfaces for those transacting in digital

platforms should carry actionable friction points or create a break for
the user to reconsider the flow: e.g. an e-commerce checkout process
that requires at least one explicit confirmation before placing an order.
Such design interventions can also be incorporated around the digital
onboarding process for internet/mobile banking as well.
The use of sophisticated automated models (AI, ML) to reduce friction

should be encouraged in real-time models that track device signals and
patterns. A harmonized set of industry standards that are interoperable
must be in place, whether it is around behavioral biometrics, locking
device or SIM, etc.
RiskRecon, Inc, worked with a large US financial

institution to develop a robust third-party risk
assessment program to assess third-party cyber
risks and manage critical vulnerabilities to keep the
systems secure.
Discussion Point 2: Bridging Coordination Gaps in
Cyber Security and Streamlined PPP Mechanisms
The upcoming National Cyber Security Strategy (NCSS) is expected

to provide a holistic 360-degree view on cyber security. Coordination
challenges in cyber security have existed on both fronts, government and
industry. Proposed projects such as a National Threat Exchange and the
National Malware Repository would require cooperation of both academia
and industry.
Some panelists said successful government and private sector

collaborations like the Aarogya Setu contact tracing app are often
driven by necessity or public interest factor. But monitoring and threat
intelligence sharing need to move in a synchronized fashion without the
need to identify a larger public exigency ground.
It was also highlighted how organic collaboration amongst the CISO (Chief
Information Security Officers) community has been missing, whether on
knowledge sharing, capacity building or other related efforts. Covid-19
has provided a trigger for CISOs to come together and discuss WFH
(work from home) implications around security. However, this must be
broadened in scope and ambition, with more institutional and streamlined
sector-wide collaborations, whether it’s among government and industry
cyber-security experts or initiatives with regulators, such as RBI and IDRBT
(Institute for Development and Research in Banking Technology) looking
at security issues in the BFSI (banking, financial services and insurance)
ecosystem.
Current Scenario: The government is looking at a new National Cyber

Security Strategy that proposes a legislative framework for cyber
insurance, and governance mechanisms for decentralized cyber-security
responsibilities. This strategy needs to include a clear directive for
institutionalized coordination mechanisms on cyber threats.
There is a need for more informal yet structured ways of threat intelligence-
sharing between CISOs from various sectors and agencies such as CERT-In
on a regular basis and not just on an ad-hoc- or crisis-mode basis such as
the Covid-19 pandemic.
Better information sharing systems such

as a fraud repository can be an effective
threat intelligence mechanism to tackle
cyber-attacks.
Key Inferences:
A national intelligence platform should be established for using global

signals emerging across networks, platforms, apps and use models to
trigger defenses. Tracking signals from frauds emanating globally is
critical.
In 60-70% of cyber security fraud cases, the service provider is located

outside India and authorities need to go through the MLAT (mutual
legal assistance treaty) process, which takes months or years. There is
a need for an e-MLAT process to make the system around information-
sharing more effective and less time-consuming.
Both of these would require cooperation mechanisms at the regional

and global levels. While this may be difficult to implement, there are
several such initiatives that have shaped cooperation successfully such
as the Cybersecurity Tech Accord on online safety/threat mitigation and
3GPP as a multi-stakeholder consortium around telecommunications
standards development.
Bug Bounty programmes (a crowdsourced initiative to invite

researchers and developer communities to test security effectiveness
and system flaws) have been effective in promoting multi-stakeholder
collaborations on security issues. More such “Good Samaritan”
initiatives or approaches are needed.
Aarogya Setu’s Bug Bounty program was prepared

with the goal to partner with security researchers
and the Indian developer community to enhance its
security and build users’ trust in the contact-tracing
system.
Session 4
PREPARING INDIA’S
AGRI ENTERPRISES
FOR CONNECTED
COMMERCE
The round-table participants included
representatives from the government, banks, agri
enterprises, multilateral agencies, VC firms and
foundations. The session focused on building a
digital ecosystem that would enable the integration
of various parts of the agri value chain and help
farmers use technology to boost productivity and
lower the cost of production, thereby leading to
higher incomes.
Context: Agriculture, with its allied sectors, provides livelihood to a large

section of the Indian population. Small and marginal farmers (owning
less than two hectares of land) account for 86% of all farmers in India,
according to the 2015-16 agriculture census. These small farmers face
several challenges through the agriculture life-cycle: challenges of access to
markets, information, advice, inputs, mechanization, logistics, and financial
services. Even before the pandemic, farmers and small agri-businesses
struggled to obtain the necessary funds needed to run and maintain their
businesses.
According to the World Bank, growth in the agriculture sector is up to four

times more effective at raising incomes among the poorest populations,
than other sectors. With the Government of India’s push to doubling the
income of farmers by 2022, India can play a significant role in showcasing
the strength of digitization in building efficiencies in agriculture supply
chains, thus increasing farmers’ incomes.
25%
The promise of digitization has not always translated into impact because
digitization efforts often suffer from poor product design, inappropriate
technology for a rural context and inadequate understanding of the needs
of key agriculture stakeholders. Smartphone penetration is very low in Rural Smartphone
rural India (25% in 2018) and internet access is limited—rural broadband Penetration in
penetration was a mere 29% in March 2020. Yet many agri-tech platforms 2018
rely on a high-tech, low-touch model, expecting farmers to download apps Source: India Cellular &
Electronic Association,
and videos on their phones and make online transactions themselves, July 2020
which may not be possible without hand-holding.
29%
Digitization impact in agri sectors have

been limited by product design, technology,
Rural Broadband
understanding of user needs and Penetration in
smartphone and internet penetration. March 2020
Source: Broadband for
inclusive development—social,
economic, and business,
November 2020
There has also been a continued concern over the lack of formal channels
to extend credit to farmers. A 2016-17 study by NABARD showed that
52.5% of agricultural households were in debt on the date of the survey.
Banking rules do not allow farmers who have running loans to access more
credit. Moreover, most agri-techs have not succeeded in digitizing financial
transactions for the farmers or enabling formal agri-credit at lower interest
rates, say by leveraging transaction data.
Session Objective: The objective of the session was to look at interventions

that are necessary to unlock the promise of digitization in agriculture.
These included the following aspects:
Enabling greater market access by digitizing the agri

value chain
Building a commercially sustainable rural digital

ecosystem at scale
Role of FPOs/agri credit societies in building and

sustaining a digital ecosystem
Financial inclusion in the agri sector
`
Achieving agri-credit at scale
Transforming the
Agri Value Chain
Hybrid ‘Phygital’
Approaches
Discussion Point 1: Access to Formal Credit as a
‘First Mile’ Concern
There has been continued concern over lack of formal channels to extend
credit to farmers. Agriculture is a major sector, employing nearly half of
India’s workforce. Over the years, agriculture’s contribution to national GDP
has declined from 34% in 1983-84 to just 16% in 2018-19 (in terms of GVA
at current prices). This is predominantly due to inherent inefficiencies in the
agricultural ecosystem. Farmers are wary of approaching banks because
the average loan processing duration is very high. Further, as most farmers
do not have a recorded credit history, it is cumbersome for banks to extend
formal credit. In the absence of formal credit, farmers use informal channels
and end up paying 4 to 5 times higher interest on their loans, entering into a
spiraling debt cycle that never ends. This implies that access to formal credit
is a first-mile concern, and not a last-mile one.
Farmers who can’t access bank loans due

to lack of credit history turn to informal
lenders, ending up paying up to five times
higher interest, and enter spiraling debt.
Distribution of agricultural households by source of loan
Institutional Non Institutional Both
Source: NABARD All India Financial Inclusion Survey 2016-17
Current Scenario: As per NABARD’s All India Financial Inclusion Survey

(NAFIS) report from 2016-17, data on agricultural loans shows that 61%
of the households borrowed only from institutions, while 30% of them
borrowed from other sources. Further, due to the lack of records related
to their agricultural activity, tenant farmers, sharecroppers, oral lessees and
landless laborers faced a lot of difficulty in accessing institutional credit.
During the lockdown, the government announced additional emergency

working capital funding of Rs 30,000 crore for farmers through NABARD
to be targeted at rural cooperative banks and regional rural banks (RRBs).
However, as per RBI’s internal working group report to review agricultural
credit, commercial banks provided the majority share (up to 80%) in
agricultural and allied credit, followed by the cooperative banks that
provided around 15% of the credit while the RRBs provided only 5% of
agriculture credit.
The RBI’s report also suggested that in order to bring the excluded
agricultural households into the fold of institutional credit, there is a need
to build an enabling ecosystem that would include digitizing land records,
reforming the land-leasing framework, creating a national-level agency
to build consensus among states and the Center concerning agriculture-
related policy reforms, and use innovative digital solutions to bridge the
information gap between banks and farmers.
Key Inferences: To ensure small and marginal farmers’ access to formal

credit systems and move a step closer towards realizing the goal of
doubling farmers’ incomes by 2022:
Digitization of land records: Due to the lack of maintenance of actual

land records, there have been challenges, including litigation. The
most important asset of a small farmer is land. Today, farmers spend
precious time and resources over land disputes. Digitized land records
would improve transparency by showing ownership status. This would
not only empower farmers but also improve ease of doing business in
the agri sector. For example, digitized land records in Uttar Pradesh,
Andhra Pradesh, Telangana and Karnataka are some such successful
digital transformation efforts.
Digitization of land records will empower

farmers by improving transparency and
ease of doing business in the agri sector.
The Bhoomi database (digitized records of all land
ownership in Karnataka), developed by the state
government, captures details of about 40 lakh
farmers and has helped check the eligibility of
farmers for loan waivers. This database combined
with the land survey, Aadhaar and ration-card
databases, as well as bank data, has helped the Crop
Loan Waiver Scheme save around Rs 4,000 crore
since December 2018, when the waiver was rolled
out. It has also helped eliminate as many as 8 lakh
loans that were identified as non-farm.
In April 2020, the Prime Minister launched the

SVAMITVA Scheme to provide an integrated
property validation solution for rural India, which has
been extended to all states and union territories in
Union Budget 2021–22.
The Center also plans to issue a 14-digit Unique

Land Parcel Identification Number (ULPIN) to every
plot of land in the country within a year’s time. It will
subsequently integrate its land records database
with revenue court records and bank records, as well
as Aadhaar numbers on a voluntary basis. The ULPIN
scheme has been launched in ten states in 2021 and
will be rolled out across the country by March 2022.
Agricultural NBFCs can play an important role in farm sector

development. As in the early days of FPO financing, credit support for
small farmers and agri start-ups is more likely to come from NBFCs,
which will then be followed by large commercial banks once the agri-
credit lending sector picks up steam and becomes more lucrative.
However, policy reforms are required to enable agricultural NBFCs to
access low-cost capital to be able to extend farm credit at competitive
rates. Just as with NABARD, cheaper credit could be made available to
NBFCs.
Creation of an Aggregated Digital Ecosystem (a 360-degree

Solution): There is a need to develop digital infrastructure to help
commercial banks to acquire new customers at reduced cost and
provide solutions focusing on all stages of the agri value chain. For
example, a common platform could support getting credit, selling
crops, receiving payment, etc. These should serve as a one-stop
destinations for farmers to engage with customers, banks and third
parties. To achieve this, more collaboration is required where fintechs
can act as the interface between farmers and large banks, and provide
banks with trusted information based on which credit can be extended
to farmers. Building low-interest credit products enabled by leveraging
transaction-level data can work well with predictive AI analytics.
SBI’s YONO App: YONO SBI Krishi has four offerings

or sections: Khata (caters to agriculture credit
solutions like agri gold loans), Bachat (financial
superstore for farmers’ investment and insurance
needs), Mitra (agriculture advisory services) and
Mandi (an online marketplace for purchasing
agricultural inputs and farm equipment).
Mastercard Farmer Network (MFN): MFN is a digital

marketplace that enables buyers and aggregators to
procure agricultural yields directly from farmers and
FPOs in a more efficient and transparent way. MFN
digitally links buyers, farmers and FPOs, facilitating
the seamless posting of orders, its fulfillment and
payments in a digital environment.
Discussion Point 2: Access to Information to
Enable Informed Decision Making
Like any other business, boosting productivity and reducing the cost
of production using technological interventions are effective ways to
increase farmer income. However, from farm to fork, issues arise due
to lack of informed choices. There is either a lack of information, or too
much information that a farmer is not equipped to choose from. For
example, a farmer in Uttar Pradesh today has access to several agriculture-
related apps, providing a lot of overlapping information, which at times is
contradictory, resulting in loss of trust of the farmer in the digitally available
information. Challenges around managing excess or insufficient produce
(gaps in understanding demand-supply situation) arise as information
asymmetry exists at every stage of the agri ecosystem.
Current Scenario: The seed is a basic input for attaining high quality yield.
Seed testing laboratories and certification standards promise better results,
but farmers are unable to use them fully due to lack of information about
modern seeds in the market. There is no proper medium or information
service that explains the importance of quality and advantages of different
varieties of seeds in the market, while some of the services come at a price
that small and marginal farmers cannot afford. Similarly, lack of information
and understanding about the use of fertilizers has led to skewed nitrogen-
phosphorus-potassium (NPK) ratios in soil, resulting in decreased fertility.
Agri financing is another area vulnerable to information gaps.
Developed by the Ministry of Electronics and

Information Technology (MeitY) and National
e-Governance Division (NeGD), UMANG (Unified
Mobile Application for New-Age Governance)
aims to drive mobile governance in India. The app
provides a single platform to all Indian citizens to
access pan India e-gov. Through the app, farmers can
apply for financial support, ‘soil health card’ services,
sell and purchase farm machinery, know about
fertilizer stock position and prices, seeds related
information and transportation services. As a one-
stop shop, UMANG is a step in the right direction:
whether the app is easily accessible to and usable by
farmers is yet to be seen. The bigger challenge lies in
popularizing the app as well as hand-holding farmers
to be able to use the app effectively.
Key Inferences: To tackle existing gaps and enable information services
that contribute to farmer development and help improve their financial
situation:
Transparency and availability of data for research by any interested

party: Analyzing data leads to insights into cropping patterns,
predicting shortage/surplus, mapping shortfall/abundance of artificial
irrigation, weather changes, etc. All this will help predict future demand
for multiple crops—on what to grow and how much to grow. A lot of
such data is available with Central and state governments, but often
not made available to researchers, start-ups, et al. Creating a system
for open sourcing all such government data and creating APIs for
researchers/private sector players to use, perhaps for a fee, can help
initiate the building of an effective agri digital ecosystem.
Making government agri data available

to third parties, with or without a fee, can
help build an agri digital ecosystem.
Fasal is an agri start-up that helps farmers through

its AI-powered IoT-SaaS platform, which captures
real-time data on growing conditions from on-
farm sensors and delivers farm- and crop-specific
actionable advisories to farmers via mobile phones in
vernacular languages.
A ‘phygital’ (physical plus digital) model in the short- to mid-term is

critical for good digitization outcomes in the long run. To decide which
service to use and what is the right price to pay for that service cannot
be left to the farmer alone. Along with digitization of the value chain,
there is a need to undertake inclusion programs to ensure that farmers
are trained to use that technology. Both private and public services can
co-exist, but the foundational element should come in the form of a
public good investment. Further, large private sector technology firms
can also act as a bridge between government programs and on-ground
agri techs to drive scale.
A ‘phygital’ model can help farmers
decide which service to use and what
price to pay, achieving better long-term
digital outcomes.
Setting up of a specialized fund for the upliftment of the agri-tech

sector: The agriculture sector requires a combination of talent and
technology to come up with solutions that can be scaled. There are
many recent agri-tech related startups with new ideas and innovative
approaches, but unable to scale up due to lack of availability of significant
risk-taking capital. There is a Start-up India fund of Rs 10,000 crore; a Rs
10,000 crore MSME fund is also being set up. On similar lines, there is
a need to create a specialized fund for the agri-tech sector, something
that traditional venture and angel funds often ignore.
Discussion Point 3: Disaggregated Agri Value

Chains and Gaps in Market Linkages
Among the larger financial inclusion initiatives that the Government

has steered, from the Jan Dhan-Aadhaar-Mobile (JAM) trinity to the
Account Aggregators platform, the focus has been on the ability to create
aggregation models—stack-like ecosystems that can apply interoperable
mechanisms for credit, lending and other challenges.
This could be adapted to the issues around the lack of market linkage
faced by farmers, as highlighted by several panelists. There is a huge gap in
what farmers get for their produce versus the price at which the produce is
sold in the market. Most of the money is distributed among intermediaries
along the value chain. Due to lack of consumer feedback, along with little
information on ‘true market demand’, the farmer continues to grow the
same crops, leading to a surplus at times. Establishing comprehensive
market linkages is critical because production does not automatically
translate into higher profitability. If done right, FPOs can become the
center for farmers where they get to deal directly with large consumers
and independent retailers, thereby creating an end-to-end value chain.
Key Inferences:
More collaboration is required between agri-related start-ups and

FPOs where the former can fill the information gap on both the
upstream and downstream sides, with the advent of technology—
smartphones, cloud-based internet services, remote sensing
functionality—in remote rural areas. FPOs can connect farmers to
start-ups and help them avail their services.
Improve operational efficiencies of FPOs by employing simple digital

tools that would aid in digitally tracking all business transactions in
a secure manner and provide them with marketing opportunities.
As of now, most FPOs face challenges in day-to-day operations and
marketing. Further, manual record-keeping and multiple record
books increase the chances of error and calls for reconciliation across
business transactions.
Session 5
ROBUST TRANSIT
SYSTEMS
FOR SMART CITIES
Panelists underscored the importance of moving to
open systems, allowing not just one city-specific card
or even one new national card usable across transit
systems, but also payment via popular platforms:
UPI, mobile wallets (PPIs), and contactless cards,
including cards stored by smartphone apps in safe,
tokenized forms. Key areas highlighted: Ease of
use and low friction, so that customers could walk
into any city transit system without queuing up for
tickets, a special card, or recharging.
The poor often queue up for tickets,

while richer travelers skip queues using
prepaid cards for cheaper fares. Inclusive
mass transit must bridge this gap.
The pandemic drove home the need for
minimizing ticket queues, preferably
using what citizens already use—
contactless cards and smartphones, with
support for m-wallets, cards, and UPI.
Transit Payment Solutions

Pros Cons
RFID tokens Cheap for user, Long queues, delays,

(All metro systems no money blocked manpower needed
in India) upfront
Prepaid cards Easy to do; already Won’t work across

(All metro systems in use for transit cities; blocks funds
in India)
Regional Combo cards A single card for Won’t work across

(Some metro systems retail purchases, cities for transit
like Kochi) and transit in a city
One more card

Common Mobility Card Will work across to carry; need to
(Planned across India) cities reissue plastic
Contactless NFC Can support NFC Robust design

(London Tube, Hong cards, and UPI, PPI apps; needed for reliable
Kong MTR, others) No new plastic zero-delay system
Source: Based on internal analysis
Context: Transit systems are the backbone of any urban center. In India,
with the transport sector expected to grow to 12% of GDP by 2026, new
doors have opened for allied sectors, especially payment service providers
and fintech firms to ease payments and improve user experience.
An example of world-class transit in India is the Delhi Metro, which carried

6 million passengers every day before the pandemic. With Covid-19
impacting mass-transit systems across the globe, both government and
industry have been forced to think and innovate towards easing customer
experience by introducing contactless payments and systems. Globally,
these modes of payments have been in use for transit for some years now.
With the onset of the pandemic, there is an increasing need for transit
systems to be further integrated with contactless payments in India.
Globally, the trend is toward open-loop transit systems, with interoperable
payment solutions allowing travelers to switch between different modes
of transport with a connected payments network. This has been a growing
point of discussion in India as well.
Beyond transit, interoperable mobile-based payment systems on

innovative platforms, such as UPI, have paved the way for new business
models. Technological changes have disrupted the conventional way in
which payments were conducted. FASTag for tolls is another example
of a system being rapidly implemented across India, driven through with
a carrot-and-stick approach backed by government mandate. There is
some way to go before India can embrace transit systems that are fully and
equally accessible to all, digitally accessible, and convenient, flexible and
affordable.
The consensus on the panel was that interoperable, open-loop transit

payment with minimal friction is needed to achieve maximum inclusion,
and make transit accessible to all—city residents, visitors and migrant
workers—without forcing them to queue up again or buy another piece
of plastic. Panelists highlighted the need for a policy push and the need
to incentivize the onboarding of new customers, especially from tier-2
and tier-3 cities, so that adoption of a range of interoperable, contactless
payments becomes commercially viable in the long run.
Session Objective: To identify a digital roadmap for accessible transit for all
citizens, areas discussed included:
Barriers to interoperability
Innovative ways of adopting open-loop standards

across multiple transit systems
Identifying gaps in current approaches, and developing

viable business models based on global best practices
Interoperating across cities through innovative

platforms
FASTag: Learnings, accelerating usage for tolls,

leveraging for parking and other use cases
Discussion Point 1: ‘Cash vs Digital’: Addressing the
Mindset Issue
In rural and much of urban India, cash is a key component that helps citizens
budget their expenses and enables them to track transactions daily. They
believe that using cash gives them more “direct visibility”, and allows them
to monitor what is coming in and going out each month. In rural India,
most players across the value chain accept cash, reducing incentives
for anyone to adopt cashless systems in the first place. Increasing the
adoption of digital payments among rural masses and educating them on
the importance of going digital remains a hurdle: this applies to much of
the urban poor.
Current Scenario: Universality of acceptance and no transaction cost make

cash the king of India’s economy. RBI’s latest annual report says Covid-19
drove households to hoard cash, increasing the currency to GDP ratio
to pre-demonetization levels of 12% in 2019–20. Currency held with the
public (CwP) accelerated from 11.3% as on 28 February 2020 to 21.3% by
19 June 2020. The RBI report highlights that the pandemic pushed people
to ‘rush to cash’.
The speed with which the cash-to-card transition is taking place in cities far
outpaces that in the rural areas. According to a Credit Suisse report cited
by RBI, 72% of India’s consumer transactions take place in cash. Merchants
and customers, especially in rural areas, remain unwilling to accept digital
transactions due to issues around network connectivity, safety and security
perceptions, and a lack of awareness of best practices.
Key Inference: To onboard new customers digitally and expedite their

transition from cash to digital, the government and industry can look at
ways to incentivize the customer until her mindset changes regarding the
need to carry cash. A mix of incentives (monetary and non-monetary),
along with policy support, can increase adoption by both merchant and
customer. A significantly successful example is that of FASTag.
FASTag is a case study: a single digital toll

system pushed nationwide, saving time
and money for users, with Rs 20,000 crore
a year projected fuel savings, and
Rs 10,000 crore a year revenue boost.
In July 2019, the FASTag program was collecting Rs
19 crore a day. This figure has gone up to over Rs 100
crore a day in 2021, following the mandatory use of
FASTag at toll plazas from February 16. Incentives
and penalties (“pay double for cash”) helped. FASTag
will help save Rs 20,000 crore per annum on fuel, the
MoRTH union minister has said.
The Indian Highways Management Company Limited

(IHMCL) is trying to take this further to allow all
participating banks to support FASTag for fuel
payments, too. IHMCL is also in talks with NPCI to
prepare a blueprint so the Urban Affairs Ministry
and respective urban local bodies can start FASTag
adoption at a larger level.
Discussion Point 2: Solving for

Customer Experience
Different mass transit systems, such as Delhi Metro, have used their own
prepaid cards successfully, but without interoperability. Despite technology
and business models in place, there are gaps in addressing other key
issues, including providing inclusive systems that are as welcoming of
poorer migrants as they are of resident white-collar workers. Today, the
poor, including migrant workers, queue up for tickets, paying full fare, while
richer travelers skip queues using prepaid cards--and even get discounts
on fares. Truly inclusive mass transit must bridge this gap, and provide the
same consistent customer experience to all its users.
Current Scenario: India is experiencing rapid urbanization. The United

Nations estimates that India is expected to add the largest number of
urban dwellers by 2050, and Delhi is projected to become the world’s most
populous city by 2028. To minimize congestion and reduce travel time, it
is important to focus on providing adequate quality of public transport
in cities. The Ministry of Housing and Urban Affairs estimates that USD
333 billion needs to be invested during 2011–31 in urban roads and mass
transit. The adoption of modern mass transit needs to move up sharply
to decongest our city roads and clean the air. Customer experience is also
poor due to the absence of seamless intermodal travel, poor feeders for
first and last mile connectivity, absence of integration of mass transit and
feeder system schedules, and lack of integrated ticketing. Most of our
mass transit systems are isolated, and run as silos. Low use of technology
and tracking data results in overcrowding or under-utilization. Rarely are
surveys carried out to track customer satisfaction in near real-time.
Key Inference: To make mass transit the preferred mode of travel, it is

essential to make customer experience friction-free. For example, Mumbai
Metro adopted an approach where no queue would be more than 2
minutes. It replaced plastic tokens with disposable paper QR codes, which
came in handy during Covid-19. This is one aspect of customer experience.
Similar targets should be aimed for and achieved at all levels of the value
chain of customer experience— ranging from the first time she is nudged
to go digital, to the time she completes an online transaction. An example
is Mysore’s Intelligent Transport System (ITS), implemented across its city
bus fleet in 2012. There was a 50% dip in fatal accidents, fewer passenger
vehicles on the road, a punctuality rate of over 90%, and less than 10
minutes’ wait time for passengers at bus stops. Commuters get real-time
information on arrival and departure times of buses, along with route
and stoppage time, through SMSs and an app called MITRA. Providing
wholesome customer satisfaction will improve digital adoption rates.
Transport for London has evolved one such best practice.
Transport for London set an ambitious target to

improve customer experience for 6.5 million bus
passengers. Improving customer service skills of its
13,000 bus drivers was identified as a crucial area to
drive loyalty and reduce complaints. London buses
generated two-thirds of complaints for TfL.
TfL invested £6M in ‘Hello London’, a customer

experience program for its network of drivers and
staff, focused on tackling ‘gain points’ around bus
drivers and customer interactions. Workshops were
held with bus operators and staff to align drivers’
duties with customer expectations. Interestingly,
when asked how to improve customer experience,
2,600 ideas came from bus drivers themselves: the
best of which were implemented on the network.
TfL saw a 77% increase in customer commendations

and 57% rise in the frequency of drivers making
announcements, two key measures of the impact of
driver behavior. There was also an estimated annual
saving of £40,000 in complaint-handling costs.
Going digital will allow fleet management,
ticketing, security surveillance, traffic
management and real-time passenger
information, helping project demand
and frequency, greatly impacting transit
revenue and expenses.
Discussion Point 3: Lack of Interoperability and

a Common Payment Acceptance Architecture
among Systems of Mass Transit
Most large cities have multiple modes of public transport with metro trains
and buses being the most common ones. However, a Delhi Metro card will
not be accepted by Mumbai Metro, and vice versa. The same problem of
lack of interoperability lies with state buses as well. Lack of standardization
and acceptance of a common payment system makes it difficult to allow
inter-state interoperability among mass transit systems.
Current Scenario: Challenges include fragmented governance, to achieve

the kind of interoperability required to make mass transit systems popular.
Different entities manage different components of transport systems, and
coordination becomes a problem.
For example, Delhi Metro Rail Corporation owns and operates the Delhi
Metro; the bus systems are managed by Delhi Transport Corporation, and
the Delhi Integrated Multi Modal Transport System is a Delhi government
joint venture with IDFC Foundation, and parking facilities and land use fall
under the purview of Delhi Development Authority. Deploying modern
technologies like contactless payments, NFC-based phone payments,
e-ticketing, and digitized parking solution will require standardization and
coordination among different entities—or would need the creation of a
new entity under whose purview all responsibilities should fall.
Another issue is the lack of standard payment acceptance systems. The

system deployed to collect fares by Delhi Metro is different from the
system deployed by Pune Metro which differs from that of the state bus
service provider in Mumbai, not allowing them to interact with each other.
Even if the government successfully rolls out a National Common Mobility
Card (NCMC), it is essential to understand that NCMC is more of a technical
standard and a goal, with different means of getting there. Some paths
require the re-issuance of another billion pieces of plastic, resulting, for
many citizens, in one more card to be carried largely for accessing mass
transit systems like buses and metros.
Even if integrated into a single card (One Nation One Card), a good question
is whether we can better leverage already issued cards and existing
standards, as well as use smartphones more effectively. An alternative
way to use existing cards without the need to issue newer ones is to
implement mobile-based contactless systems such as NFC technology,
easing customer travel for smartphone users. TfL (Transport for London)
has been amongst the earliest adopters of NFC technology for carrying
out contactless payment at scale.
Key Inference: Alternatives to a new ‘common card’ center around NFC-

based acceptance, so users can pay via their smartphones using popular
systems like UPI or m-wallets, or use their already-issued contactless debit
or credit cards. Another option is a common transit app for all cities. Many
city transit commuters now have a smartphone. An app where a commuter
can just enter the destination, generate a QR code and use that to enter
the transit system could be a good first step, as we move towards a fully
open system like TfL’s in London. If the industry can develop an interactive
and practical ticketing system, Indian Railways could consider it too as it
will have enormous benefits, including minimizing queues, and ease of use.
Standardization is required to promote interoperability across various

verticals. If all industry players adopt standard architectures for achieving
integration and promoting partnerships with banks, then interoperability
can be achieved much faster and the proposition be more commercially
viable. It is important to move from closed loop systems to open loop
ones, and standard architectures will help catalyse the transition. Doing so
will ensure that the same card or payment technique is acceptable across
all modes of transport, thus helping in achieving commercial viability. So a
person can use the same card (or app) to travel on Delhi Metro, Pune Metro,
or a public bus anywhere. This can also be achieved by the city transit
systems accepting standard modes of payments, such as smartphone
apps using UPI over NFC, or contactless cards.
The same card should let a person travel

on the Delhi or Kochi metros or a DTC
or BEST bus. This can also be achieved
by transit systems accepting different
modes of payment, such as apps using
UPI or m-wallets over NFC, or contactless
cards.
Many global cities have deployed automated fare
collection (AFC) systems supporting smart cards
and NFC-enabled devices, to increase the efficiency
of mass transit. One such example is Singapore, and
its EZ-Link smart card. It is a single, multi-purpose,
stored-value contactless card used for fare payment,
small-value retail purchases, taxi, and parking.
GLOSSARY
3GPP 3rd Generation Partnership Project
AA Account Aggregator
AFC Automated Fare Collection
AI Artificial Intelligence
API Application Programming Interface
BFSI Banking, Financial Services and Insurance
BRAP Business Reforms Action Plan
CERT-IN Indian Computer Emergency Response Team
CISO Chief Information Security Officer
CNP Card not Present
COF Card on File
CwP Currency with Public
DBS Development Bank of Singapore
DBT Direct Benefit Transfer
DEPA Data Empowerment and Protection Architecture
DFI Digital Financial Inclusion
DMRC Delhi Metro Rail Corporation
DPIIT Department for Promotion of Industry and Internal Trade
DTC Delhi Transport Corporation
ECLGS Emergency Credit Line Guarantee Scheme
E-KYC Electronic Know Your Customer
EoDB Ease of Doing Business
FI Financial Inclusion
FIPs Financial Inclusion Plans
FPO Farmer Producer Organization
FY Financial Year
GAME Global Alliance for Mass Entrepreneurship
GDP Gross Domestic Product
GeM Government Electronic Marketplace
GFX Global Findex (World Bank)
GoI Government of India
GPRS General Packet Radio Service
GST Goods and Service Tax
GSTN Goods and Service Tax Network
GVA Gross Value Added
IDFC Infrastructure Development Finance Company
IDRBT Institute for Development and Research in Banking Technology
IHMCL Indian Highways Management Company Limited
IMF International Monetary Fund
IoT Internet of Things
iSPIRT Indian Software Products Industry Round Table
ITS Intelligent Transport System
JAM Jan-Dhan Aadhaar Mobile
JDY Jan Dhan Yojana
KYC Know Your Customer
LSP Licensed Site Professionals
MeitY Ministry of Electronics and Information Technology
MFN Mastercard Farmer Network
MITRA Mobile Initiated Tracking & Rescue Application
ML Machine Learning
MLAT Mutual Legal Assistance Treaty
MoRTH Ministry of Road, Transport and Highways
MSME Micro, Small and Medium Enterprises
MUDRA Micro Units Development and Refinance Agency
NABARD National Bank for Agriculture and Rural Development
NAFIS NABARD All India Financial Inclusion Survey
NBFC Non-Banking Financial Company
NCMC National Common Mobility Card
NCSS National Cyber Security Strategy
NeGD National Electronic Governance Division
NFC Near-Field Communication
NPCI National Payments Corporation of India
NPK Nitrogen-Phosphorus-Potassium
OCEN Open Credit Enablement Network
ONOC One Nation One Card
OTP One Time Password
P2P Person to Person
PIDF Payment Infrastructure Development Fund
PMJDY Pradhan Mantri Jan Dhan Yojana
PoS Point of Sale
PPP Public Private Partnership
QoS Quality of Service
QR Quick Response
RBI Reserve Bank of India
RRB Regional Rural Bank
SaaS Software as a Service
SCF Supply Chain Finance
SIBDI Small Industries Development Bank of India
SIM Subscriber Identification Module
SME Small and Medium Enterprises
TAT Turn-Around Time
TfL Transport for London
TLD Top Level Domain
TPAP Third Party Application Provider
TReDS Trade Receivables Discounting System
ULPIN Unique Land Parcel Identification Number
UMANG Unified Mobile Application for New-Age Governance
UPI Unified Payments Interface
UX User Experience
VC Venture Capital
WB World Bank
WFH Work From Home
ACKNOWLEDGEMENTS
Report Curation Team
NITI Aayog
Ajit Pai Distinguished Expert, Economics and Finance
Janak Priyani Young Professional
Pankhuri Dutt Public Policy Consultant
NITI Aayog is also grateful to Kannan Kumar, Ranveer Nagaich, Saurabh Thakural,
and Siddharth Sinha for their valuable feedback on sector-specific panels.
Mastercard
Ashutosh Chadha Vice President and Head – Public Policy
Latika Taneja Director – Public Policy
Ravi Aurora Senior Vice President and Group Head, Global Community Relations
Rohan Sirkar Director – Public Policy
FTI Consulting
Amrit Singh Deo Senior Managing Director
Pragya Gupta Senior Consultant
Prasanto K Roy Senior Director
Saksham Kotiya Consultant
Subhodeep Jash Director
Edited by: Indrani Dasgupta Consulting Editor, NITI Aayog
The views and opinions expressed in this document are those of the
speakers and do not necessarily reflect the positions of the institutions or
governments. While every effort has been made to verify the data and
information contained in this report, any mistakes or omissions are
attributed solely to the authors and not to the organizations they represent.
LIST OF SPEAKERS
S.NO NAME DESIGNATION ORGANIZATION
1. Abhay Kumar Mishra President & Mumbai Metro One

Chief Executive Officer
2. Abhiraj Singh Bhal Co-founder Urban Company
3. Ajit Pai Distinguished Expert, NITI Aayog

Economics and Finance
4. A K Sharma Executive Director Reserve Bank of India
5. Alka Arora Joint Secretary, Small Ministry of Micro, Small

Medium Enterprises and Medium Enterprises
6. Amitabh Kant Chief Executive Officer NITI Aayog
7. Amit Arora Senior Technical Adviser, World Bank

Rural Development Finance
8. Amrish Rau Chief Executive Officer Pine Labs
9. Amrit Singha Vice President, Operations Indian Highways

Management Company
Limited
10. Amrit Singh Deo Senior Managing Director FTI Consulting
11. Anil Bhandari Chief General Manager, Chief State Bank of India
Information Security Officer
12. Anup Saha Deputy Chief Executive Bajaj Finance

Officer
13. Arindom Datta Executive Director RABO Bank
14. Ashok Kumar Director Indian Cybercrime

Coordination Centre
15. Barkat Ali Chief General Manager, State Bank of India

Business Development
16. Challa Sreenivasulu Managing Director, State Bank of India

Shetty Retail and Digital Banking
17. G Narendra Nath Joint Secretary National Security

Council Secretariat
18. Gaurav Porwal Chief Operating Officer Ola Cabs
19. Himanshu Bansal Regional Director, Digital Mastercard

Inclusion and Strategic Growth
20. Jyoti Prakash Gadia Co-Chair, Small and Confederation of Indian

Medium Enterprises & Industry
Finance Committee
21. Karthik Ramanathan Senior Vice President, Mastercard

Cyber and Intelligence
Solutions, Asia Pacific
22. Kishor Narang Founder, Mentor & Principal Narnix Technolabs

Design Architect
23. Dr. Leora Klapper Lead Economist World Bank
24. Mallika Kodali Product Manager Google Pay
25. Dr. Manisha Acharya Chief Executive Officer Indigram Labs Foundation
26. Manoj Mittal Deputy Managing Director Small Industries

Development Bank of India
27. Dr. Neelam Patel Senior Adviser, NITI Aayog

Agriculture
28. Nikhil Agarwal Consultant, Transport World Bank

Division
29. Nishant Gupta Director, Urban Mobility Mastercard

South Asia
30. Pawan Bakhshi India Lead, Financial Bill & Melinda Gates
Services for the Poor Foundation
31. Porush Singh Division President, Mastercard

South Asia
32. Prasanto Kumar Roy Senior Director FTI Consulting
33. Praveena Rai Chief Operating Officer National Payments

Corporation of India
34. Purvi Mehta Senior Advisor and Head of Bill & Melinda Gates
Agriculture, South Asia Foundation
35. PT Suresh Chairman Paycraft Solutions
36. P Vasudevan Chief General Manager, Reserve Bank of India

Department of Payment
and Settlement Systems
37. Rajat Moona Director Indian Institute of

Technology, Bhilai
38. Rajeev Kumar Senior Vice President- Mastercard

Market Development,
South Asia
39. Dr. Rajendra Jagtap Chairman and Managing Pune Mahanagar

Director Parivahan Mahamandal
40. Rajiv Sabharwal Managing Director and Tata Capital

Chief Executive Officer
41. Rajneesh Kumar Senior Vice President & Chief Flipkart

Corporate Affairs Officer
42. Rama Vedashree Chief Executive Officer Data Security Council of

India
43. Ratnaboli Ghorai Dinda Deputy Director General National Informatics

Centre
44. Raul Rebello Senior Vice President & Head Axis Bank
of Rural Lending & Financial
Inclusion
45. Ravi Aurora Senior Vice President Mastercard

and Group Head – Global
Community Relations
46. Saloni Taneja Field Officer Small Farmers

Agribusiness Consortium
47. Sameer Ratolikar Executive Vice President & HDFC Bank

Chief Information Security
Officer
48. Santosh Kumar Vice President, Mastercard

International Markets
49. Sarosh Amaria Managing Director Tata Capital Financial

Services
50. Shankara Nand Mishra Director Department of

Telecommunications
51. Shashi Verma Director of Strategy and Transport for London

Chief Technology Officer
52. Sonjoy Saha Adviser NITI Aayog
53. Subhash Chand Joinwal Chief General Manager, State Bank of India
Small and Medium Enterprises
& Supply Chain Finance
54. Subhodeep Jash Director FTI Consulting
55. Venkatesh Murthy Director Data Security Council of

India
56. Vidya Krishnan Chief General Manager, State Bank of India

Digital & Transaction Banking
- Products & Operations
57. Vineet Rai Founder and Managing Aavishkaar Group

Director
About Mastercard
Mastercard is a global technology company in the payments industry.
Our mission is to connect and power an inclusive, digital economy that
benefits everyone, everywhere by making transactions safe, simple,
smart and accessible. Using secure data and networks, partnerships
and passion, our innovations and solutions help individuals, financial
institutions, governments and businesses realize their greatest potential.
Our decency quotient, or DQ, drives our culture and everything we do
inside and outside of our company. With connections across more than
210 countries and territories, we are building a sustainable world that
unlocks priceless possibilities for all.
About NITI Aayog

The National Institution for Transforming India, also called NITI Aayog,
is the premier policy ‘Think Tank’ of the Government of India, providing
both directional and policy inputs. While designing strategic and long-
term policies and programs for the Government of India, NITI Aayog also
provides relevant technical advice to the Centre and States. An important
evolutionary change from the past, NITI Aayog acts as the quintessential Knowledge Partner
platform of the Government of India to bring States to act together in
national interest, and thereby fosters cooperative federalism.
About FTI Consulting

FTI Consulting, Inc. is a global business advisory firm dedicated to
helping organizations manage change, mitigate risk and resolve disputes:
financial, legal, operational, political & regulatory, reputational and
transactional. With more than 6,300 employees located in 28 countries,
FTI Consulting professionals work closely with clients to anticipate,
Research & Curation Partner
illuminate and overcome complex business challenges and make the
most of opportunities.
www.mastercard.com
Knowledge Partner
www.niti.gov.in
Research & Curation Partner
www.fticonsulting.com
May 2021

Connected Commerce Full Report

Uploaded by

Copyright:

Available Formats

Connected Commerce Full Report

Uploaded by

Document Information

Original Description:

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Connected Commerce Full Report

Uploaded by

Copyright:

Available Formats

CREATING A ROADMAP FOR A

DIGITALLY INCLUSIVE BHARAT

Mastercard & NITI Aayog Knowledge Series

Knowledge Partner Research & Curation Partner

1. From Vice Chairman, NITI Aayog 1

2. From the CEO, NITI Aayog 3

3. Note from the Session Chair 5

6. S1: Connected Commerce in Post-Covid India 13

7. S2: Helping MSMEs Survive and Thrive 24

8. S3: Enhancing Security and Trust 33

9. S4: Helping Agri Enterprises Thrive and Scale 40

10. S5: Robust Transit Systems for Smart Cities 51

The world is becoming increasingly interconnected, thanks to rapid

In India too, there is an increasing digitization of

Digital financial services span a spectrum of sectors. Not just limited to

Mobility is an upcoming use-case for digital financial services. It can

Digital technology will be the backbone of the

Already, customers are demanding digital solutions for even basic

Financial inclusion as a process depends on the regulatory environment

We are living in an ever-changing environment. In the post-Covid era,

The Jan Dhan Yojana has been a strategic policy

This stakeholder analysis was conducted to discuss the demand and

Digital has shown us the way to redefine successful inclusive growth. By

We must build digital systems for underserved

In an interconnected world, interoperability is key to financial inclusion,

Between October and November 2020, Mastercard and NITI Aayog

The roundtable participants included government leaders and experts

The central questions discussed were:

1) How to accelerate digital financial inclusion of the underserved

2) Which confidence-building measures will enable MSMEs towards

3) How to move the needle on cyber security concerns from being

4) Which interventions can unlock the promise of digitization in India’s

5) Which are the essential elements of a digital roadmap towards

1. Accelerating the Next Phase of

Key inferences from this session:

To strengthen acquisition infrastructure needed for double-sided

• Increase innovation and investment in the acquisition space,

- Allow for the adoption of more automated infrastructure

NBFCs can be enabled to participate more freely in the payment

• Issuance of credit cards

• Allowing for OTP based mandates, e-KYC and other services to

Facilitating the adoption of aggregator-based models around

• Permitting a regulatory sandbox model on aggregator platforms

Key inferences from this MSME session were:

Streamlining and digitizing registration and compliance processes,

For supply-chain financing to grow, more sources of credit need to be

• Equip better data-driven models around transaction tracking and

• Enabling conditions for fast-tracking a loan service provider’s

• Allow ease of adopting AI, data analytics and blockchain to

Key inferences from the trust and security session were:

A whitelisting approach can be developed on verified contact

The use of sophisticated automated models (AI, ML) to reduce

Agriculture, with its allied sectors, provides livelihood to a large section of

Key inferences from this session were:

Digitization of land records in a timebound manner, aggressive

Digital infrastructure should be built to help commercial banks

Need for a hybrid ‘phygital’ model to achieve digitization outcomes

Mass transit is the backbone of developed economies. India needs