Finance

Rural-play fintech firms see revival as rural economy starts getting back on its feet

MUMBAI: Rural play fintech companies are on a revival path, aided by a good monsoon, the government’s financial inclusion push as well as subsidies, and an early reopening of the agriculture economy.

Companies providing intermediary payments, banking and insurance services to rural customers have seen a sharp recovery in June and July, from the initial shock of the nationwide lockdown that brought supply chains and merchant commerce across the country to a standstill.

Moreover, a record number of digital payments have been reported on channels operated by the National Payments Corporation of India, largely aided by the withdrawal of several government relief funds from the Jan Dhan accounts of beneficiaries, industry players told ET.

“The lending cycle and disbursements have seen a near ‘V-shaped’ recovery on our platform,” said Anand Kumar Bajaj, CEO of PayNearby. “Aadhaar payments through Direct Benefit Transfers (DBT) handouts were at an all-time high in June.”

This is reflected in the NPCI data as well.

A total of 100 million transactions worth Rs 20,000 crore processed on the Aadhaar-enabled Payment System in June, against 106 million transactions worth Rs 18,000 crore in May.

In comparison, during February, a total of 40 million transactions worth Rs 11,300 crore were processed on AePS.

AePS is the key infrastructure that provides payment rails for accessing government relief and subsidy programmes for most beneficiaries in rural and semi-urban areas.

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PayNearby, a leading facilitator of AePS, is now expanding its catalogue of business into insurance and credit disbursements, as well through partnerships. It has also opened a job portal in tie up with the Retailers Association of India to address the job crisis triggered by reverse migration into rural areas.

The portal, which was launched in May, saw over 2,500 migrants getting employment opportunities near their hometowns, as demand for manpower and services picked up, said Bajaj.

There has been increased demand for social welfare pension and insurance schemes under the government’s Atal Pension Yojana, Pradhan Mantri Jeevan Bhima Yojana and Pradhan Mantri Suraksha Bhima, said Seema Prem, CEO of FIA Technology – another village-based fintech company.

Companies are also leveraging the government’s push towards financial inclusion, which has found resonance among villagers due to the financial uncertainty brought on by the pandemic.

“The economic activity in rural geographies have surely seen a better pickup than urban and metro locations,” said Prem.

About 65% of FIA Technology’s network is based in rural districts, she added.

The healthy monsoon amid the ongoing Kharif cropping season has been another encouraging factor.

“Barring some areas of Assam, Maharashtra and Bihar where there have been floods, it has been an encouraging monsoon in most parts of the country,” said Prem.

These trends, however, do not mean the pandemic has not caused lasting damage to parts of the rural economy, where most employment is seasonal and sectors unorganised, industry observers said.

However, they added, these trends are indicative of a broader recovery due to unique characteristics of the rural economy — which has shown better resilience to the disruptions than the urban economy.

“Our rural business is still doing better than the urban but it’s almost flat in July versus June,” said Rishi Gupta, MD of Fino Payments Bank. “Remittances in rural areas are nearly at 60-70% pre-Covid-19 levels, account openings and merchant additions have crossed all-time highs while withdrawals are down by 15% as the government schemes have now run off their course.”

Ketan Doshi of PayPoint India said rural areas have seen increased adoption of digital payment services. “Over June and July, we have seen an overwhelming jump in recharges and bill payment categories,” he said.

[This story is part of a series of articles in association with Facebook. Facebook has no editorial role in this story.]

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