Name of the Author:-Rangpariya Dipali Kishorbhai

Designation :- Student , Institution Name:- S.K. School of Business Management

Title of the Abstract :- Challenges of Digital Finance in India
1.Abstract
This paper provides a discussion on some issues associated with digital finance – an area
which has not been critically addressed in the literature. Digital finance and financial
inclusion has several benefits to financial services users, digital finance providers,
governments and the economy; notwithstanding, a number of issues still persist which if
addressed can make digital finance work better for individuals, businesses and
governments. The data collect for this reseach paper from secondary sources from
secondary data like reseach paper ,web sides etc. The digital finance issues discussed in this
article are relevant for the on-going debate and country-level projects directed at greater
financial inclusion via digital finance in developing and emerging economies. (Ozili, 2018)
Thus , digital finance has specified a new banking industry. Digital finance is a financial
services delivered through mobile phones , personal computers, the internet or card linked
to a reliable digital payment system Digital Finance has the potential to provide affordable ,
convenient and secure banking service. (Tabitha Durai,Stella G., 2019)

Keywords: Digitalization , Finance, Importance ,E -commerce, government policy etc.

2. INTRODUCTION
Since decades, the financial industry has experienced a continuous evolution in service
delivery due to digitalization. This evolution is characterized by expanded connectivity and
enhanced speed of information processing both at the customer interface and in back-office
processes. Recently, there has been a shift in the focus of digitalization from improving the
delivery of traditional tasks to introducing fundamentally new business opportunities and
models for financial service companies. Digital Finance encompasses a magnitude of new
financial products, financial businesses, finance-related software, and novel forms of
customer communication and interaction—delivered by FinTech companies and innovative
financial service providers. Against this backdrop, the research on finance and information
systems has started to analyze these changes and the impact of digital progress on the
financial sector. Therefore, this article reviews the current state of research in Digital
Finance that deals with these novel and innovative business functions. Moreover, it gives an
outlook on potential future research directions. As a conceptual basis for reviewing this
field, the Digital Finance Cube, which embraces three key dimensions of Digital Finance and
FinTech, i.e., the respective business functions, the technologies and technological concepts
applied as well as the institutions concerned, is introduced. This conceptualization supports
researchers and practitioners when orientating in the field of Digital Finance, allows for the
arrangement of academic research relatively to each other, and enables for the revelation
of the gaps in research. (Peter Gomber, Jascha-Alexander Koch, Michael Siering, 2017)
3. Digitalization
Digitalization has been identified as one of the major trends changing society and business.
Digitalization causes changes for companies due to the adoption of digital technologies in
the organization or in the operation environment. This paper discusses digitalization from

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the viewpoint of diverse case studies carried out to collect data from several companies,
and a literature study to complement the data. This paper describes the first version of the
digital transformation model, derived from synthesis of these industrial cases, explaining a
starting point for a systematic approach to tackle digital transformation. The model is aimed
to help companies systematically handle the changes associated with digitalization. The
model consists of four main steps, starting with positioning the company in digitalization
and defining goals for the company, and then analyzing the company’s current state with
respect to digitalization goals. Next, a roadmap for reaching the goals is defined and
implemented in the company. These steps are iterative and can be repeated several times.
Although company situations vary, these steps will help to systematically approach
digitalization and to take the steps necessary to benefit from it. (Päivi Parviainen, Maarit
Tihinen, Jukka Kääriäinen, Susanna Teppola, 2017)
4.FINANCE
Digital finance is a powerful means to expand access beyond financial services to other
sectors, including agriculture, transportation, water, health, education, and clean energy.
(Rizzo/CGAP, 2014)
4.1 Growth of Financial Sector in India
The growth of financial sector in India at present is nearly 8.5% per year. The rise in the
growth rate suggests the growth of the economy. The financial policies and the monetary
policies are able to sustain a stable growth rate.

The reforms pertaining to the monetary policies and the macro economic policies over the
last few years has influenced the Indian economy to the core. The major step towards
opening up of the financial market further was the nullification of the regulations restricting
the growth of the financial sector in India. To maintain such a growth for a long term the
inflation has to come down further.
The financial sector in India had an overall growth of 15%, which has exhibited stability over
the last few years although several other markets across the Asian region were going
through a turmoil. The development of the system pertaining to the financial sector was the
key to the growth of the same. With the opening of the financial market variety of products
and services were introduced to suit the need of the customer. The Reserve Bank of India
(RBI) played a dynamic role in the growth of the financial sector of India.
The growth of financial sector in India was due to the development in sectors
4.2 Growth of the banking sector in India
The banking system in India is the most extensive. The total asset value of the entire
banking sector in India is nearly US$ 270 billion. The total deposits is nearly US$ 220 billion.
Banking sector in India has been transformed completely. Presently the latest inclusions
such as Internet banking and Core banking have made banking operations more user
friendly and easy.

4.3 Growth of the Capital Market in India

The ratio of the transaction was increased with the share ratio and deposit system
The removal of the pliable but ill-used forward trading mechanism

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The introduction of infotech systems in the National Stock Exchange (NSE) in order to cater
to the various investors in different locations
Privatization of stock exchanges
4.4 Growth in the Insurance sector in India
With the opening of the market, foreign and private Indian players are keen to convert
untapped market potential into opportunities by providing tailor-made products.
The insurance market is filled up with new players which has led to the introduction of
several innovative insurance based products, value add-ons, and services. Many foreign
companies have also entered the arena such as Tokio Marine, Aviva, Allianz, Lombard
General, AMP, New York Life, Standard Life, AIG, and Sun Life.
The competition among the companies has led to aggressive marketing, and distribution
techniques.
The active part of the Insurance Regulatory and Development Authority (IRDA) as a
regulatory body has provided to the development of the sector.
market in India
The venture capital sector in India is one of the most active in the financial sector inspite of
the hindrances by the external set up.
Presently in India there are around 34 national and 2 international SEBI registered venture
capital funds

Find below detailed information on Financial Sector in India:

Financial Sector of India
Analysis of Indian Financial Sector
Bond Market in India
Centrum Finance Limited
CIL Securities Limited
Growth of Financial Sector in India
Karvy Group
L& T Finance Limited
Major Financial Companies in India
PNB Gilts Limited
Stock Market in India (Financial Sector of India)

5 Challenges and important of digital finance in India

Digital finance also offers major technological and infrastructure challenges. Sparse
populations, inconsistent network coverage, insufficient capital for building new business
models and customers’ lack of trust and comfort with technology can stand in the way of
success, particularly in remote or undeserved communities.
The financial industry’s efforts to serve lower-income customers have gone through four
distinct phases — from social banking to microfinance to financial inclusion and now to
technology-driven financial services or digital financial inclusion

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Digital technologies have now become the most powerful lever for financial inclusion and
are considered the smartest way to rapidly unlock economic opportunity and accelerate
social development with economic empowerment. Digital tools have fostered speedier and
more inclusive growth by dramatically reducing financial service providers’ costs and making
services more convenient and accessible for users, especially low-income subscribers in
remote locations. Money sits in a virtual account on a server where it can be transferred
with the click of a button.

According to the latest RBI report, between financial years 2017 and 2019, the number of
digital transactions in India shot up by 139 per cent to 23,373 million transactions. The
corresponding value of these transactions has soared to Rs 1,638,495 billion over the same
period. They grew by 19.5 per cent during 2018-19, compared to the growth of 22.2 per
cent during 2017-18. The central bank report says that, over the years, the digital finance
landscape has witnessed unprecedented waves of innovation. It has accordingly set an
ambitious target to push up the volumes of digital transactions by four times by 2021. (QAZI,
2019)
6 E-commerce in India
India has an internet users base of about 475 million as of July 2018, about 40% of the
population. Despite being the second-largest userbase in world, only behind China (650
million, 48% of population), the penetration of e-commerce is low compared to markets like
the United States (266 million, 84%), or France (54 M, 81%), but is growing, adding around 6
million new entrants every month. The industry consensus is that growth is at an inflection
point.

In India, cash on delivery is the most preferred payment method, accumulating 75% of the
e-retail activities.Demand for international consumer products (including long-tail items) is
growing faster than in-country supply from authorised distributors and e-commerce
offerings.

In 2017, the largest e-commerce companies in India were Flipkart, Amazon, Myntra, Paytm,
and Snapdeal. In 2018, Amazon beat Flipkart and was recorded the biggest ecommerce in
india in terms of revenue. (https://en.wikipedia.org/wiki/E-commerce_in_India, 2018)
7 Government policy
7.1 26 important schemes launched by Narendra Modi government
(1) PM-KISAN (Pradhan Mantri Kisan Samman Nidhi) Scheme
Main purpose: This scheme promises to pay all poor farmers (small and marginal farmers
having lands up to 2 hectares) Rs 6,000 each every year in 3 installments through Direct
Bank Transfer. It would reportedly benefit around 14.5 crore farmers all over India.
(2) Pradhan Mantri Kisan Pension Yojana:
Main purpose: To address the problems of farm sector distress, the Modi 2.0 Cabinet has
approved a proposal to provide small and marginal farmers with a minimum Rs 3,000 per
month fixed pension, costing Rs 10,774.5 crore per annum to the exchequer.
The eligible farmers in the 18-40 years age group can participate in this voluntary and
contributory pension scheme.

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Once the beneficiary of the pension dies, the spouse will be entitled to receive 50% of the
original beneficiary's pension amount.
(3) Mega Pension Scheme
Main purpose: A Mega Pension Scheme has been approved for the traders, shopkeepers, and
self employed persons (whose GST turnover is less than Rs 1.5 crore).
The scheme guarantees a minimum assured pension of Rs 3,000 per month for around 3 crore
small traders, self employed persons, and shopkeepers, once they attain 60 years of age.
(4) New Jal Shakti Ministry
Main purpose: It aims at providing piped water connection to every Indian household by the
year 2024. Reports say that the ministry will now be able to formulate plans to address the
issue of water management.
(5) Jan Dhan Yojana
Main purpose: Pradhan Mantri Jan Dhan Yojana is a National Mission on Financial Inclusion
which has an integrated approach to bring about comprehensive financial inclusion and
provide banking services to all households in the country. The scheme ensures access to a
range of financial services like availability of basic savings bank account, access to need
based credit, remittances facility, insurance and pension.
(6) Skill India Mission
Main purpose: The Mission has been developed to create convergence across sectors and
States in terms of skill training activities. Further, to achieve the vision of 'Skilled India', the
National Skill Development Mission would not only consolidate and coordinate skilling
efforts, but also expedite decision making across sectors to achieve skilling at scale with
speed and standards.
(7) Make in India
Main purpose: PM Narendra Modi launched the 'Make in India' campaign to facilitate
investment, foster innovation, enhance skill development, protect intellectual property &
build best in class manufacturing infrastructure.
'Make in India' has identified 25 sectors in manufacturing, infrastructure and service activities
and detailed information is being shared through interactive web-portal and professionally
developed brochures. FDI has been opened up in Defence Production, Construction and
Railway infrastructure in a big way.
(8) Swachh Bharat Mission
Main purpose: On 2nd October 2014, Swachh Bharat Mission was launched throughout
length and breadth of the country as a national movement. The campaign aims to achieve the
vision of a 'Clean India' by 2nd October 2019.
The Swachh Bharat Abhiyan is the most significant cleanliness campaign by the Government
of India.
(9) Sansad Adarsh Gram Yojana
Main purpose: It is a rural development programme broadly focusing upon the development
in the villages which includes social development, cultural development and spread
motivation among the people on social mobilization of the village community.
(10)Pradhan Mantri Shram Yogi Maan-dhan (PM-SYM)

Main purpose: It is a voluntary and contributory pension scheme, under which the
subscriber would receive the following benefits:

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(i) Minimum Assured Pension: Each subscriber under the PM-SYM, shall receive minimum
assured pension of Rs 3000/- per month after attaining the age of 60 years.
(ii) Family Pension: During the receipt of pension, if the subscriber dies, the spouse of the
beneficiary shall be entitled to receive 50% of the pension received by the beneficiary as
family pension. Family pension is applicable only to spouse.
(iii) If a beneficiary has given regular contribution and died due to any cause (before age of
60 years), his/her spouse will be entitled to join and continue the scheme subsequently by
payment of regular contribution or exit the scheme as per provisions of exit and withdrawal.
(11)Beti Bachao Beti Padhao
Main purpose: The goal of this scheme is to make girls socially and financially self-reliant
through education.
(12)Hridaya Plan
Main purpose: To take care of world heritage sites and to make these sites economically
viable.
(13)PM Mudra Yojna
Main purpose: Pradhan Mantri MUDRA Yojana (PMMY) is a scheme launched by the
Hon'ble Prime Minister on April 8, 2015 for providing loans up to 10 lakh to the non-
corporate, non-farm small/micro enterprises.
To create an inclusive, sustainable and value based entrepreneurial culture, in collaboration
with our partner institutions in achieving economic success and financial security.
(14)Ujala Yojna
Main purpose: State run Energy Efficiency Services Ltd (EESL) has distributed over 30
crore light emitting diode (LED) bulbs across country under zero-subsidy Unnat Jyoti by
Affordable LEDs for All (UJALA) scheme.

(15)Atal Pension Yojana

Main purpose: Atal Pension Yojana is a pension scheme mainly aimed at the unorganized
sector such as maids, gardeners, delivery boys, etc. This scheme replaced the previous
Swavalamban Yojana which wasn't accepted well by the people.
(16)Prime Minister Jeevan Jyoti Bima Yojana
Main purpose: Pradhan Mantri Jeevan Jyoti Bima Yojana is a government-backed Life
insurance scheme in India. Pradhan Mantri Jeevan Jyoti Bima Yojana is available to people
between 18 and 50 years of age with bank accounts.
(17)Pradhan Mantri Suraksha Bima Yojana
Main purpose: Pradhan Mantri Suraksha Bima Yojana is a government-backed accident
insurance scheme in India. As of May 2016, only 20% of India's population has any kind of
insurance, this scheme aims to increase the number.
(18)AMRUT Plan
Main purpose: Providing basic services (e.g. water supply, sewerage, urban transport) to
households and build amenities in cities which will improve the quality of life for all,
especially the poor and the disadvantaged is a national priority.
The purpose of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is
to:
Ensure that every household has access to a tap with the assured supply of water and a
sewerage connection.

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Increase the amenity value of cities by developing greenery and well maintained open spaces
(e.g. parks) and
Reduce pollution by switching to public transport or constructing facilities for non-motorized
transport (e.g. walking and cycling). All these outcomes are valued by citizens, particularly
women, and indicators and standards have been prescribed by the Ministry of Housing and
Urban Affairs (MoHUA ) in the form of Service Level Benchmarks (SLBs).
(19)Digital India Mission
The purpose of Atal Mission for Rejuvenation and Urban Transformation (AMRUT) is
to:
Ensure that every household has access to a tap with the assured supply of water and a
sewerage connection.
Increase the amenity value of cities by developing greenery and well maintained open spaces
(e.g. parks) and
Reduce pollution by switching to public transport or constructing facilities for non-motorized
transport (e.g. walking and cycling). All these outcomes are valued by citizens, particularly
women, and indicators and standards have been prescribed by the Ministry of Housing and
Urban Affairs (MoHUA ) in the form of Service Level Benchmarks (SLBs).
Main purpose: The Digital India programme is a flagship programme of the Government of
India with a vision to transform India into a digitally empowered society and knowledge
economy.
(20)Gold Monetization Scheme
Main purpose: Gold Monetisation Scheme was launched by Government of India in 2015,
under this scheme one can deposit their gold in any form in a GMS account to earn interest as
the price of the gold metal goes up.
(21)UDAY
Main purpose: Ministry of Power, GoI launched Ujwal DISCOM Assurance Yojana
(UDAY) which was approved by Union Cabinet on 5th November, 2015.
The scheme envisages:
Financial Turnaround
Operational improvement
Reduction of cost of generation of power
Development of Renewable Energy
Energy efficiency & conservation
(22)Start-up india
Main purpose: Startup India is a flagship initiative of the Government of India, intended to
catalyse startup culture and build a strong and inclusive ecosystem for innovation and
entrepreneurship in India.
(23)Setu Bhartam Yojana
Main purpose: This yojana aims to make all national highways free of railway crossings by
2019.
(24)Stand Up India
Main purpose: Stand-Up India Scheme Facilitates bank loans between 10 lakh and 1 Crore
to at least one Scheduled Caste (SC) or Scheduled Tribe (ST) borrower and at least one
woman borrower per bank branch for setting up a greenfield enterprise.
(25)Prime Minister Ujjwala Plan

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Main purpose: Pradhan Mantri Ujjwala Yojana (PMUY) was launched by Prime Minister of
India Narendra Modi on May 1, 2016 to distribute 50 million LPG connections to women of
BPL families.

(26)Namami Gange Yojana

Main purpose: The Government launched an integrated Ganga conservation mission called
'Namami Gange' to arrest the pollution of Ganga River and revive the river. (India Today,
2019)
Conclusion
Digitalization are use to business, company, individual and all sector related to finance. It
includes e commerce, e payment, health insurance ,etc. Digitalization are decreases the cost
and increases the profit the all sector. Government of India also uses digitalization .
Digitalization is seen in Bank sector, insurance sector, mutual fund ,other types of
investment schemes. Digital finance is much benefited to India.
Reference
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