As I pointed out in my article last week, with the proliferation of smartphones and falling data costs, DigiLockers coupled with e-signature offer the promise of facilitating financial inclusion by reducing CAC and compressing TATs. However, there is scope for greater proliferation of the use of DigiLocker and expanding the number of use cases that DigiLocker can serve. As mentioned in my previous article, easing Requestor-side access for regulated financial entities by removing/reducing the number of hoops they have to jump to get access to the repository is one potential way to proliferate use. This article will highlight two additional policy actions facilitative of the proliferation of DigiLocker for financial services use cases. Firstly, there is an urgent need for the sectoral regulators including the RBI especially, to issue a circular to banks and NBFCs recognizing and encouraging the latter’s use of DigiLocker.
Secondly, while as conceived the original DigiLocker system was envisaged with regard to individuals and not businesses, it is important to recognize that the long tail of Indian entrepreneurship, i.e., the micro and small entrepreneurs, operate their businesses through/as proprietorships. Onboarding GSTN as an issuer offers the promise of significantly enhancing the utility/use case for DigiLocker. This article will make a case for that.
Bottlenecks in the DigiLocker Ecosystem
Market practice and precedent in India will show that financial sector constituents derive comfort from their own sectoral regulator “green-lighting” a technology. So, an important complement to easing the hoops leading up to the access is regulatory recognition of DigiLocker by RBI and comfort to its regulatees.
Subject to borrower’s consent, a simple circular addressed to banks/NBFCs recognizing that they can:
