Leveraging global capital markets to give muscle to an innate competitive advantage in rapid mass transaction systems will lead to India becoming a petri dish for global enterprises and new-age innovation that it yearns to be, says Probir Roy.
Two pieces of news did not get the attention which they deserved - the Reserve Bank of India’s (RBI’s) norms for financial market infrastructures (FMIs) and an announcement by the ministry of finance that unlisted Indian companies may be allowed to list overseas.
FMIs, by definition, cover payment systems and services, central securities depositories, settlements, counter-parties and trade repositories.
They essentially ensure that the entire macro-financial system functions effectively and efficiently, facilitating the flow of credit and monies to and from consumers, farmers and businesses during times of stress.
The insurance business, integrated-billing platforms and other payment-system operators are also an integral part of any FMI, as are institutional retail-payment infrastructure systems.
The real-time gross settlement system has countrywide level value, with its throughput at 77 per cent of all e-payment transactions; the Unified Payments Interface has 64.5 per cent market share in the transaction count; and The Clearing Corporation of India has a post-lockdown settlement run rate of $4 trillion dollar for securities, etc.
The opportunity to list overseas provides a huge opportunity for new-age digital and fintechs - higher valuation multiples and a diverse pool of investors, better risk appetite for tech-driven businesses, global brand recognition, lower currency risk, a ready source of foreign currency to facilitate international expansion, and better corporate governance, even as it buffs up Brand India.
Unfortunately, India is missing the bus, as many companies try and reverse-merge into Singapore-based entities and list under their more friendly listing rules.
The Depository Receipts and Special-purpose Acquisition Company routes burden new-age firms with tax, regulatory, domicile and hoops-and-jump issues, which leads to erosion of value and strains the management bandwidth.
Policybazaar is looking to dual-list in the Indian and overseas markets, and this will take it to multi-unicorn level at around a few billion dollars in the global public markets - a true benchmark for realised value.
There are other firms waiting in the wings to make India not only the fintech hub of the world, but also the unicorn hub, by leveraging the global bourses to get true value across the digital payments spectrum.
It is moot to note that more than 150 Chinese entities which raised over $100 billion are now worth $1 trillion on the NASDAQ.
Just two Indian players - Infosys and TCS - changed the fortunes of India on the world stage.
So, imagine what laurels and capital a dozen or so more could bring.
The RBI has developed robust and low-cost efficient rapid payment systems over many decades.
And these have been proof-tested to such a rigorous level that there is demand from neighbouring countries and beyond to deploy them as building blocks for their own FMI framework.
Leveraging global capital markets to give muscle to an innate competitive advantage in rapid mass transaction systems will lead to India becoming a petri dish for global enterprises and new-age innovation that it yearns to be - especially so, as the government has recently earmarked digital payments as one of seven technology-driven transformation sectors.
The opportunity is ours to lose.
Probir Roy is co-founder, PayMate, & Independent Director, Nazara Technologies.
