Mumbai (mAHARASHTRA) [India], October 8 : Financial inclusion in India still faces certain challenges, particularly in bringing communities living in tribal and rural areas into the formal financial system, said M Nagaraju, Secretary, Ministry of Finance.
Speaking to the media on the sidelines of the Global Fintech Fest 2025 in Mumbai, Nagaraju noted that while digital payment platforms, such as UPI, have experienced significant growth, there are still gaps that need to be addressed in rural connectivity and financial access.
"UPI growth has been very substantial even now, but one challenge we have is bringing entire communities living in tribal and rural areas into a formal financial system. At many places, we also have the challenge of the internet. Therefore, offline transactions and rural transactions are our challenge," he said.
He further noted that many fintech companies are now focusing on innovations that can bridge this digital divide.
"If you notice, a large number of fintechs are actually innovating and connecting the rural communities and also offline products. Once we do that, I think the entire country will be on the formal financial system and will be able to do digital payments," he added.
Regarding the Merchant Discount Rate (MDR) charges, Nagaraju clarified that there is no proposal before the government to impose MDR charges.
"The government has only said we are not imposing MDR charges. That we have told. The government has issued statements. Only the media has been, I think. So we are not concerned if the media keep making one offer or the other," he said.
Responding to a query on the impact of GST on insurance premiums, the Finance Secretary said that all insurance companies have passed on the complete 18 per cent GST benefit to policyholders.
He added that every insurance company will follow its own business plan to manage the impact of Input Tax Credit (ITC).
"Some PSU insurers have a plan of expanding the business, whereas some other companies are reducing the commissions. Therefore, each one will design their own business plan according to their standard. But one thing is sure, all the insurance companies, both public and private sectors, have reduced the insurance cost through the GST," he said.
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